Startup giving away product early or hold out?


So we are a SaaS model new recruitng tool and weve been trying to acquire our first couple of major deals. I read alot of books on starting up and have advised start ups my whole career. At first we wanted to only show a basic trial but we ended up giving away free trial in order to attract people. How to measure the coast (s) of acquiring thoase initial customers in terms of time and effort to a start up?

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asked May 4 '11 at 07:19
Rich Goldstein
21 points
Top digital marketing agency for SEO, content marketing, and PR: Demand Roll

2 Answers


Well you can look at it as a cost of aquisition.

  • Costs of getting them to the site
  • Lost revenue from giving it away. Number of customers * monthly charge
But I think this is the wrong view to take. Really until you have a critical mass of users (paid or otherwise) these early adopters should be treated more like royality than a cost. They are taking the biggest risk because generally your still learning about the product, the market, the real needs of the users. There is a high chance you will disappear again or not end up servicing all their needs.

I'm not sure what your service is but I would suggest remodelling your pricing model so that you have a free "entry level" and then advanced features or high number of users per account that you can charge for.

This seems to be the dominant strategy for most Saas operators.

Also have a look at ZenDesk or UserVoice, they both have good examples of Saas models plus it they have a key feature your going to need in order to be successful: a feedback mechanism.

answered May 4 '11 at 09:02
Robin Vessey
8,394 points


If you have users who are unwilling to pay for your product, then you probably have users who don't quite understand the value it brings. You probably don't understand the value either. Because if you did, you would communicate the value clearly. And if your users understood the value, they would be happy to pay the price.

There is nothing wrong with not knowing the value of your product or not being able to communicate it. For new products, it is very hard to tell what is truly valuable to the users. Sometimes you need real users using your product and storing their data with your product so that you can understand what they truly value. This information can be used to pivot your business to achieve a better and profitable product-market fit.

One exception to this rule is what I call "broker" products. That is where you broker access from one set of users to another set of users. e.g. buyers & sellers, or employers & job-hunters. In that case, you need to give free access to one set of users and charge the other set of users for access to your app and the first set of users.

Another exception is data gathering and data analysis products. In this situation, you give users free access to the product because they are contributing data to your web app which is marginally useful to them personally, but is much more useful to them in the aggregate. The true value of the product is seen when you generate a "report" or some other digest of aggregate data, and that report should be price to help your business turn a profit.

answered Jun 6 '11 at 14:13
Jay Godse
381 points

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