For alpha/beta testing, should I charge users or pay users?

I'm creating a mobile app for small business wholesalers and the alpha will be finished soon.

I have done some face-to-face market research by visiting trade shows they exhibit in and showing them a prototype and asking questions. I get positive reactions and when I ask the question "Would you like to alpha test?" Most of them say "Yes". But I'm finding that when I follow up with these users, I can't get a hold of them. So I'm assuming that maybe they really aren't interested in being an alpha user any more.

Someone suggested that I should be asking for some token amount of money like $20 to show that they are committed. Yet, someone else suggested that I provide incentive by compensate them some how - maybe money or random prize or discount on the software. What is the best approach? I only need about 5-6 businesses for alpha testing.

(disclaimer: not knowing what your product does nor what your customer group is, this will be a more generic answer)

Alpha-testing

This is very often an incomplete stage of the cycle and IMO will require experienced testers that is familiar with the development process as there could be missing some functionality. Ideally alpha-testing should be done in-house or by a small group of people not necessarily associated with the companies you're targeting - as it is much a technically and operational oriented testing.

In other words: bringing an alpha version to potential future customers can fail as they, in general, are not fully familiar with the development process and it can leave them with a negative impression of the app. Alphas are too incomplete to bring outside IMO.

Beta-testing

Now the application is complete in the sense of functionality and bugs are to be found and removed. IMO this is the stage where you should involve a few select potential customers. It's easier to get apps at this stage tested as everything is in place and bugs are the focus, not so much functionality. But not without an internal initial beta-test to catch the most obvious bugs.

To pay or not to pay

You are asking people to do work for you. Charging them would be wrong in my opinion. For businesses to spend resources/time on doing testing for you would make them want something in return. Maybe you can offer them 50% for the first year, free first two months, free setup (something more in terms of what you deliver) and so forth.

As they already have spent time on your product and are getting more familiar with it, they are more likely to continue with it if they think of it as a good product. See the compensation as a sales investment. As you work closer with customers that do testing you can also get valuable references/case-studies to use with future customers.

Make it a win-win.

Testers

In my experience people tend to say yes to do testing as it initially makes them feel part of an exclusive group, ie. have access to something that not everyone has access to. The reality bites when they discover they need to sit down, spend time and work with an incomplete app that may give unpredictable result, or even loss of work (if that applies).

Finding the right person to do testing is not always easy, but if the company has an "evangelist" (s)he can often be a good starting point to either test or help find the right persons for you to do the testing.

You will always get a lot more people saying they will test than actually testing. With this in mind, make sure you get a lot more committed to testing than you need.

As for paying, I wouldn't have them pay and I wouldn't pay them. I don't think payment is the answer to this problem.

You need to inspire them with the vision of your product and you need to make it very easy for them to be a tester (go set it up for them if you need to).

Getting testers isn't easy, but don't get discouraged, what you are finding is perfectly normal. Just hustle and make it work.

I think it is better to charge. You could say, I want to alpha test my application/service so that it can better suit your and our customers need(s). You can alpha test for $(x/2) - ie. Half the price. As a reward, you can make the service cheaper for them for a small time or if you charge one time, charge them less, give them 25% discount or something.

This will get you people who actually want to help you and get rid of those people who aren't too serious. This will give you a realization of how many people would actually pay for what you have to offer (when this happens, most people realize they were not realistic about their sales at all before!). Some people alter their actual opinion to appeal to you (i.e. they don't want to seem rude, cheap, etc.).

Also, I suggest you read "Purple Cow". According to that book, it's better to have sneezers test your application. Sneezers actually like testing newer alternatives and spread the word for free!

Well you need two things -

1. You really have to convince them that your product is worth their time. If it is something new, then they need to be convinced that there is a problem they could solve with your app. If it something for which there are other options available, then they must be convinced why they should choose your product over others, specially over the one they are using right now, if they are. If it were the latter case, I'd go over forums related to competing products to see if there are any local businesses which are not happy with the product they are using and target those.
2. You need to give them incentives to test out your product, which is unproven. They are taking a risk and there should be something in it for them too. It could be discounted subscriptions, free or discounted future add-ons, free swag or if you can have spare cash - free accounts on services that their business could use like Dropbox. With just ~5 businesses shouldn't cost more than a few hundred dollars. Don't offer money, that would raise all kinda flags, at least it would for me.