Lite Version or Trial?
Our product (desktop software, not SaaS ) price is about $1000. Shall we cut features and release a free lite version or just a trial with all features for a limited time?
I see that lite version can help us on our marketing effort since it's free, it's easier to pitch.
What's your experience on this? Has anyone compared these before?
13 Answers
I have only done the demo version with our $1500+ desktop application, so I might be biased.
We are in a niche market and a we believe that for us a cheaper version or worse a free lite version would cannibalize our sales too much to be worth it. The main reason is that we cannot make a useful lite version without giving away too much features.
We also have a limited market (due to language and standards that we conform to). What we do today is:
- a no-save demo (we don't want the customer to wait until they have 30 solid days to try it)
- 30 day trial (the full version which call home very often)
We are very liberal with extending the 30 day trial if anyone needs more time.
There are a lot of things to consider:
- Are you able to create a lite version that is useful without cannibalizing your sales of the full product?
- Is your market big enough that a lite version with give you considerable better reach?
- Will your product solve a customers problem in a few hours or will the customer have to get used to the product before it is saving any money?
- Will your customers expect a free lite version?
Edit: Added a few examples in response to the (good) answer from Bob Walsh:
In the general case I would not do a lite version for a $1000 product, but there are products where it would be useful. If you where to launch a for example a CAD program today you will need the lite version to get attention. It would compete with other free alternatives and at the same time show that your product is easy to use, fast and stable. This would build trust so customers invest in the $1000 product.
If you are product is for example a recovery tool I would not trust the user with a full featured trial. They will only need the product once and the problem is solved in a few hours. The barrier to pay for something that is in the past is too high for most customers (business users have the money, but the pain to get a purchase order is simply not worth it).
Conclusion: The best choice depends on both the product and the market
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+1 for recovery example – The Dictator 15 years ago
(Sorry Jarie) but a demo version is the way to go:
- A lite version cannibalizes sales from your real version.
- A lite version degrades the value of the pro version.
- If your product is really worth $1000, then stand by that and provide a 30 day trial full working version. A Crippled trial tells people you don't trust them: why should they trust you?
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@Bob: Should it be called "demo" version, or "trial" version? – Lkessler 15 years ago
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@Bob: I agree, but I wouldn't recommend it in all cases it depends on the product and the market. I ran out of characters in the comment so I have edited my answers. – Peter Olsson 15 years ago
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What do you think about marketing? As free version will be much easier to pitch in everywhere without looking like spam, and it's definitely more viral. There is nothing viral about demo. – The Dictator 15 years ago
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Do you have data to back this up, Bob? I don;t think you can tell someone else they are wrong without hard data. Both methods are prevalent. Both seem to work. Lite versions segment markets very well and capture sales the you would NOT have gotten. I think you are wrong on this, but I have not done my own testing to confirm. – Tim J 15 years ago
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Lite versions address a "lower-end" market. One could view this as capturing MORE market share rather than cannibalizing. Also, what do you mean by "degrades the value of pro"? Ont he contrary - it enhances the value of the higher end product. It is a premium. – Tim J 15 years ago
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Note also that in some instances a demo/trial for 30 days allows a user to complete their work and get the functionality for free. For example, I am aware of people who use 30 day full version trials for code profiling tools to do profiling on their apps and then never pay for the full version - they have completed their work. Now that is cannibalization I know about. – Tim J 15 years ago
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Note also that lite versions allow a company's product to gain market-share and name recognition. One example is fogbugz for startups and students. "the first one is free"/drug dealer model. I think you can say they are pretty successful. Either model can work, but to claim that lite versions cannibalize and trials don't is misleading. It also would help to have specific examples - and given your background you might be able to provide them? – Tim J 15 years ago
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Tim code profiling example is awesome also our product might suffer from it. I didn't want to get into details but I keep that problem in mind about providing a beta. Customer actually might use the trial and never buy again, because they already solve the problem, or large part of it. – The Dictator 15 years ago
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@tim, @fm: obviously a great deal depends on the nature of your product. I assumed it was business (not developer), fairly steep learning curve. I released a consumer windows desktop product in two versions - a free version which got 50K downloads and paid $24.95 that got far less than that an very few conversions. The problem with Lite version is how do you avoid perception that it's a cut down version of Pro or that Pro has only a few more features but you think it's justified to charge $1k. Also, if developers might use it once and be done, how can it be worth $1k? – Bob Walsh 15 years ago
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@lkessler either demo or trial work, but I think trial conveys a closer (and therefore) better relationship with the prospective customer. – Bob Walsh 15 years ago
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@Bob - if the time it takes to duplicate the functionality takes more than $1000 to reproduce, then it is worth $1000, regardless of what the intro/demo pricing is. RE the free - You assume that you would have gotten more "conversions" if you had no free version - and that is a big assumption. – Tim J 15 years ago
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@Bob - thanks for sharing the experience you had. You are right - it does depend a lot on the product and how you segment the price and the functionality. – Tim J 15 years ago
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@Bob - I think providing a free version can also be seen as getting closer to the customer - by making a community around it. Again, see FogBugz example. – Tim J 15 years ago
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@Bob If the products solves a problem which might cause the company to loose $100K then $1K is worth to use once. That's what we do improving the application of our clients and catching one more bug in let's say "Twitter" is definitely worth more than $1K even they use it for once. – The Dictator 15 years ago
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@Bob thanks for sharing the data, that's very useful but I think as you said it's about how much feature you going to cut. I assume the fine balance is "users who wouldn't buy would start using the free version" and user "who would buy would buy the Pro version, free version should not satisfy them enough". If you can do this then it's perfect. Good, cheap marketing without loosing any profit. Although I understand that it's almost impossible to hit that sweet spot. – The Dictator 15 years ago
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@fm - I'm not criticizing your product - I don't know what it is. But if it is a one time use product that justifies a $1000 pricetag, it's more of a "magic wand" service than a product. Nothing wrong with that, but you might want to think in those terms. – Bob Walsh 15 years ago
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@Tim, Tim, Tim. I've talked to Joel Spolsky about this specifically - giving away one seat to FogBugz for free is good, smart and has an incremental cost near zero. But having one and only one person in an organization use FB is like trying to make music with with one cymbal - the real power of FB is for organizations. – Bob Walsh 15 years ago
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@Bob - No offense taken. You make some good points and I think the "right" answer is going to depend on competitors and customers. – Jarie Bolander 15 years ago
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@Bob - re - FB. I don't understand your point. FB is hugely helpful for me in both my day job of 20 developers, my one-man projects and for my two person startup venture. I used it as a counter-example to your complaint that free/lite versions cannibalize. I suggested that they complement. Your response is a red herring or perhaps I don't understand it at all. – Tim J 15 years ago
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@Tim - FB is designed for groups, teams, organizations, companies of developers, testers, tech support people etc. the real power of FogBugz comes into play when it's used by all people involved in an organization. Sure a single developer can use it to their benefit. But a good deal of FogBugz functionality makes little sense when there's one user and only one user. – Bob Walsh 15 years ago
This question can't be answered with either or.
Instead let's look at a product like PhotoShop from Adobe.
PhotoShop is a very complex product that allows you to manipulate pictures and create visual images. There is no chance that you will ever be able to understand just how powerful this product is unless you gain some serious expertise. So many alleys to explore so many possible ways to explore them.
Now that product exist in 4 different versions.
- A Trial version that lasts for 30 days and gives you access to the entire product with all the bells and whistles you can imagine.
- A Trial version that lasts for 30 days and give you access to the entire product but with a few things taken out
- A light trial version called PhotoShop Elements that is limited to some very basic features and at a heavily reduced price.
- Photoshop.com an online light version that is free for to use if you sign-up.
They also do educational licensing.
This works as a great funnel system allowing for a gradual acquaintance with PS.
What Adobe have done is to divide it into different models based on at what level you are when you try out PS. Adobe knows that if you are experienced or a professional designer/artist/photographer there is no way around their product. But for consumers or people who occasionally needs to use something like that the advanced features will never be interesting. They simply require to much experience.
It is therefore important to establish the right principles before you decide on this. And I would recommend you think about it the following way:
Use Trial versions if: 1. The power of your product is understandable within the trial period. It doesn't help you to have too many features if it's too complex for users to explore within the trial period and you don't want a too long trial period.
2. Your product is well known and people know what they are getting. If your product is one of those applications that might be complex but have a good professional userbase that understand the value you are providing. They wont be persuaded by trying it out no matter what you do, they have already made up their mind.
3. You are frequently selling new versions of the same product (Product Name1, Product Name2)
Users know your product well, no matter how complex it is they know they need the new version they just don't know if it's worth it to get the new product.
4. Your product is the de-facto market leader or the only one in it's field This is when it's not a question of exploring whether this works. It works, everyone want's it so you don't have to waste time trying to have people explore or use fractions of it.
Use Lite/Freemium if: 1. Your product is in a competitive market You need to get people to use your product so they can see how great it is and how much greater it would be if they just had the pro version.
2. If you are doing a complex product with a new unknown type of product Meaning if your product is somehow hard to understand within a trial period and it's benefits won't be experienced with just 1 month of trial.
3. If getting users matter as much as customers Will your product be even better by the number of users it has?
Hope this helps
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Quite helpful answer, thanks. In my case I'm more after penetrating the market. We believe our product is much better than competitors but it's new and there is already big guys in the market. So we are a bit late in the game. So I was hoping by showing off how good we are with some basic features, potential clients will notice that the whole package should be even better. Also we got limited budget for marketing and this seems like the cheapest way to reach a lot of people. – The Dictator 15 years ago
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+1, and I'll add a 5th way: You can steal Photoshop. That's not just tounge-in-cheek -- theft is a normal part of life when you have an expensive product, and in a sense it's a type of price segmentation that you can actually *intentionally* count on. If you know that's going to happen, for example, maybe you don't need a Lite version because you know those people will steal it anyway. – Jason 15 years ago
Perhaps a better idea is to escape the question:
For now, since you don't have significant sales, it's more important to just get sales and get people using the software no matter what. Well, not "no matter what." Profitably. But the amount of profit isn't as important as just getting more customers.
So today you could offer a Lite version. Use it to test how cost-conscious people are as well as which features people are willing to pony up extra money for. Use it to make it harder for a low-cost competitor to get users.
Then later, if you decide a Lite version is hurting sales, just stop offering it! Offer all your existing Lite users free or inexpensive upgrades and move on with your life.
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So far this is definitely the plan, it's nice to see different angles on the subject. After all we are already suffering in sales department I don't think we can make it worse anyway :) – The Dictator 15 years ago
Lite is the way to go. You want your customers to use your product and see how well it works. I have even seen companies give people the full version for 30 days and then it reverts to the lite version (so they can still view their work).
When I think demo, I think "this is what the company wants me to see." This is fine but the problem you might run into is that your customers may want to use your software for a different reason or in a different way.
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+1 for the full version 30 days, reverting to lite version after that. – Tim J 15 years ago
Beware of comparing the success of other applications that offer lite/free versions. Some have included advertising in the free versions; you never mentioned that as an option. Others have successful free versions as far as number of users (I don't consider this as a percentage of market share since last time I checked, markets were places where money was exchanged for goods & services.), but I don't know if the mass appeal of the free version helps generate enough exposure to lead to sales/profits.
Going from free to $1000 seems like a big jump. I say let them try it for 30-90 days so they can decide to buy it. We could all give better answers if we knew what your product does and what market you are targeting.
What is your end game? Do you think a free version will get so many users that you'll figure out some way to make money off of it or eventually sell it? You'll have to remove a lot of features from the $1000 version. You can't have a narrow market here either.
This is my experience and how we've built a successful desktop software business over the past dozen years:
A trial allows:
- Potential customers to start using a product they might purchase from you
- Potential customers to try out doing business with your company
- Good products & companies to sell themselves because they meet genuine needs
A lite version provides:
- Smaller or budget conscious companies to start using your software
- A reasonable path to the full version for companies that grow in resources or interest in your product
Free limited products on the other hand:
- Isn't viable by itself since it requires support and generates no profit
- Lessens the perceived value of a good commercial product
- Therefore free is often seen as a gimmick by the informed, and something for nothing by the selfish
We make available a fully functional trial and a lite version of our time clock software. It's been a very successful strategy for us.
Start charging users when they are successful with your product. How would you do that? Have a lite version that is still functional for basic usage. Do not cripple features on it.
Here is why: When a user sees your product for the first time, she probably will not know if she needs your service. She will be a casual user. She just wants to try things out and possibly learn something. If it is useful, she might keep using it. When you disable your product for her(crippleware or trialware) you probably have lost her forever.
Unless I have a great need and no other options, I usually do not try crippled or trial products. I keep seeing and considering Dharmesh's great product, Hubspot, but I haven't done anything about it since it is a trialware and I do not want to spend a week to learn and use it and then lose that time if I decide it is somewhat useful but not worth the price. (I have great respect for Dharmesh and I know he is really nice guy, otherwise I wouldn't use his product as an example) I think if he had a Basic version Hubspot would be more successful.
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All good but you are missing one crucial point. Your argument is correct if the user has already have a free way to do what you provide. If the product's lite version is superior to all other similar free products then you are doing a *big* favour to the user by giving it for free. So it's not crippleware any more it's a gift from you to them. – The Dictator 15 years ago
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I agree with you on that. I was probably thinking about the other posts when I responded, not the original question. If it is a useful lite version, it is not a crippleware. I think you should go ahead with the Lite Version. Even if the original product is $1000, you should let the casual users try and get used to your product. Best of luck. :) – Aytekin 15 years ago
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Thanks :) Nice blog post though, it doesn't apply to the our product but I really liked the idea charging users when they start to benefit from the product. If you can do that it's a win/win situation and that's how it should be . – The Dictator 15 years ago
It's possible that a cheaper Lite version will cannibalize sales, but I don't agree with the logic that therefore you shouldn't have one.
First, eventually (if not already) you'll have a competitor which is cheaper and has fewer features. If the presence of your own Lite version destroys your sales, a competitor is worse. So you have to answer that problem anyway.
Second, often a cheaper version makes people more likely to buy the more expensive version. It's like having the stripped-down car model which few people buy -- when you see that something inadequate is $X, it makes it easier to justify spending $2X on the better thing.
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Good point about competitors, but it still depends on the product. If the UI and basic features make up too much of the product value you can't always give that away. The second point argues that you should have a $500 and a $1000 product. $2X is still nothing for X=0. :-) – Peter Olsson 15 years ago
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It can even be $800 and $1000.... I said "2X" but I didn't indent for it to be exact. – Jason 15 years ago
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I believe that if you put the low price to $0 you loose this effect (that's why I couldn't avoid 2X=0 for X=0 example). Your point is true as soon as you start charging for both versions though. I do recommend the book The Future of a Radical Price by Chris Anderson for a lot more information on the free version (you can get it free as a podcast from iTunes) – Peter Olsson 15 years ago
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There are tons of examples of companies who give away free Lite versions as a way to spread the word and get people using their stuff, then upsell an expensive version, so I don't see how you can say unilaterally that it's a bad technique. SolarWinds is the most recent obvious example of this being the entire business model driving hundreds of millions in revenue. – Jason 15 years ago
Some reason when to create a free or cheap lite version:
- You absolutely need the free lite version if the success of your product depends on network effects. For example, communication software (like ICQ, Skype etc.) depends on other people using the same software, so you have someone to talk to.
- You need the free lite version if you want to establish your file format as the de-facto standard. (Unless you are MS)
- You need the lite version if you have to compete against free or cheap similar products. (Just to gain attention and market share)
- You probably want to make a cheap (USD50) lite version if there is a huge potential market of occasional users (i.e. amateurs) who won't pay for the real thing and don't need every feature.
If none of these reasons apply, you are only canibalizing yourself when you sell something for cheap that should cost real money.
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Actually I've got the opposite reason. We are competing with big and expensive products, the problem is customers don't know us, hence we can't sell much. And since the product itself is expensive people don't just try it out, which means having only a few users, which means it's gonna take ages to be even ramen profitable. So I'm more after marketing rather than anything else. – The Dictator 15 years ago
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If people aren't even TRYING it after they FIND you because of the pricetag, you may need to rethink the pricetag anyway. Or tier pricing. – Jason 15 years ago
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Jason actually I missed a bit in there, they don't try because we don't have a trial. There are some users who send us email and depending on the sender we send trial, don't ask :) It's rubbish process right now. – The Dictator 15 years ago
Presumably the purpose of this is to increase your market. I think that it might be an idea to try and find the objections of people who aren't buying.
If they're not buying only because they haven't got a trial option, then a trial version would overcome that objection.
If they're not buying because of a price objection then a maybe a free version (and possibly lower priced non-free versions) might overcome their objection. At least if they are using a free/lite version you can sell up.
Before offering a lite/free version you should probably try and find out whether your existing customers would be likely to downgrade. I.e. make sure they're using at least some of the features you'd remove from the lite version.
Offering a trial version only may be easier, but some people shy away from these as you may only be able to trial the product properly by committing to it.
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The problem is there are not enough people who aware of the product :) – The Dictator 15 years ago
Both models are prevalent and both seem to work.
It does depend on your situation and what work you are willing to put into it.
Can you identify a market segment that would spend money on a light version and can you identify that functionality subset easily?
I have never compared the two with my current product - it was too much work to do for such a small niche.
For my new venture we are going to segment our customers with a lite version (though at $10k that is really the wrong name - the next step up is $25k) There is no demo version for this market.
EDIT
I know that I have been put off by 30 day demos/trials because of:
- need to submit my personal information and "request" a trial. Rather than get a simple download to try that day I have to go through the hurdles of talking (email or phone) to a salesperson and by the time that process is done (if i even bother) I have already tried a few OTHER competitors who have similar software for cheaper or don't make me do a 30 day trial.
- I am not sure I can get it all tested within 30 days (trial period)
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I think when the price is $10K+ then all sales model is gets different anyway and it sounds like a really niche market where getting attention might be way easier assuming there is not much company working on that niche. – The Dictator 15 years ago
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Yep, niche market, but fairly significant. The real value is in the relationships so that when we enter the next related market we are a known quantity and have real status. – Tim J 15 years ago
If you are selling a piece of software for $1000 you must be providing a solution for a vertical market and you have few competitors. I don't think having a lite version will help and as you said, a lite version will be pretty useless if you are going to remove some functions.
A trial FULLY functioning version is a good solution. Personally every software has to have a trial version. I don't buy software if I don't know what it does and feel comfortable using it.
