Is a good strategy to start with a free service and then charge for the service?

I'm building a startup of P2P model that will work with a payment gateway. But I have a problem with that, in my country the formalities to have a payment gateway are very slow (take about two months). Right now I have all the site development done and I think that if I wait all that time it'll be prejudicial for my startup because the competition can win the market. I was thinking to start the site working like a simple page of free announces, and then when I have the payment gateway, to start the real business(charge for the service). This with the objetive of gaining users and don't losing time. It's a good strategy? or what strategy do you recommend me?

If you haven't read Getting Real do it now. It's free online resource from 37signals the makers of Basecamp. There is a tip in the book that they released their product before they had the code for the payment processing developed yet.

Do a promo that you get 30 or 60 days free of charge to test the service. At that point they can pay or cancel their subscription. By that time your payment gateway information will be cleared and you can start charging.

Offering a risk free trial is a good strategy anyways because people like 0 risk, and will certainly do a free trial.

Good luck.

I'm 99% that note is in Getting Real, if it's not it's in their book Rework. Either way read Getting Real, it is a quick read and 100% worth it.

Good luck Eberto!

I will suggest to offer free service for few months and after you have a good number of users on websites and have good name in the market, than you can start charging people for monthly subscriptions.

In this way you can prove that you website is useful before someone pays you.

I think it's good for a few reasons. The reason I did it, was to get contact information for all the companies I wanted to market to.

Getting them to signup for your service and giving them something for free creates a relationship, so when you call them later on to upsell them, it's not a cold call, they know who you are, and they take the call.

Here's what I did. I launched my web app, and got over 1,000 companies in a particular niche signed up for free.

I then called 5 of them who were active users and said "Hey guess what, I'm going to give you free service for life, but I want you to tell me "honestly" what a fair price is for this service, and what you would pay."

I got great responses from all of them, and then proceeded to sign up over 200 (yes that's right) of my 1,000 free clients. Signed each and every one up over the phone, for $20/pop. Not f*** you money, but gave me the freedom to start focusing on the app full time.

I've done my share of cold calling, it sucks, and I'll never have to do it again. I'm always going the freemium route, worked like a charm for me.