Should I provide a trial version or a money-back guarantee?
I am about to launch a small time management/GTD desktop utility for Windows in $10 - $15 price range.
Now I have a dilemma. Should I provide a trial version or a money back guarantee?
Here is my thoughts:
People are lazy. Most of them will never be able to organize their time despite of software/technique used. Consequently, conversion rate to paid version will be very low.
Taking it into account, I want to provide a money back guarantee instead of a trial period.
Some additional considerations:
- Since I am going to use PayPal users will have a money back option anyway. Though, it is unlikely they will bother starting a dispute if the app does not crash their computer.
- Product is too small to divide it to free/full version
- There is no online license checking which means money back guarantee might be abused.
What is your opinion on that?
In response to Gary E :
It seems that I did not emphasize the nature of my app enough.
The main point is that it is a time management app.
Now, the issue with such apps is that most people will stop using it after a short period of time simply because they are lazy. I.e. quality or feature set of the app does not have a great influence on the converstion rate.
Regarding loosing customers due to lack of a trial version, I should mention that my product is highly tarteted to a small niche (people using specific time management technique). I.e. potential customers have (I hope so) pretty clear idea of what to expect. Also, I'll add some nice video tutorial on the landing page to clearly demonstrate how the app works.
As for the price, my idea was to put it in $9.95-$14.95 range to compensate an absense of the trial version.
It seems that such strategy works nice for Apple App Store. Also, I already mentioned that the market niche is quite small so I can not hope to get any noticable revenue with a typical 0.XX%-1% conversion rate.
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How much money do you want to make with this software? small niche at a low price will not result in a lot of money - take your monthly salary (or the salary you hope for) divide it by price minus processing fees – this is the number of new customers you have to get every single month (and we didn’t even takes marketing costs such as advertizing into account) – Nir 13 years ago
6 Answers
First: if you take credit cards for payment you are effectively already offering a money back guarantee. See the question Should We Offer a Money Back Guarantee Second, without a trail version you will definitely lose some portion of your sales to people who will not buy without testing your software first. If you don't mind losing a protion of your sales, skip the trial. Otherwise, check out your competition and see how they manage their trials.
Third, unless your software is going to be tremendously popular, selling it for $10 - $15 is a mistake. In my 30+ years of software experience, it is exceeding hard to make money with desktop apps that sell for less than $29.95. Processing fees and overhead eat up too large a portion of your sale to make it worthwhile. (Try using Google ad words with a $10 sale point!)
Fourth, what works for the Apple App store usually does not work for the desktop Windows market. In the desktop world Price == Quality. Generally in the desktop world, the lower the price, the lower the perceived value of the software.
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I was given similar advice when I proposed offering my software at price points under $10. – Mike Nereson 13 years ago
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+1 on pointing out that you already offer a money back-- the question is whether you market it as such. – Joseph Barisonzi 13 years ago
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I have updated my question to address the issues you raised. – Aku 13 years ago
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Good point about perceived value, though it seems that for tiny\non-business-critical software small price works well. – Aku 13 years ago
"Product is too small to divide it to free/full version"This may or may not be true. You may feel like every feature you've put into the app is necessary for every user, but you're probably wrong. If you had to, you could probably pick out some premium features.
Money back guarantee might be abused.And I would expect your guarantee to be abused. Its just the cost of offering a guarantee. The hopes are that having the guarantee makes you more money than it costs you.
As for trial vs guarantee, I don't have an answer for you. I have the same dilemma in the app I am building. I am currently planning to offer a limited-feature free tier (SAAS) as well as a satisfaction guarantee.
Also, this again may be no help to you, but I am also considering changing my free tier to a one time payment of $1. This adds a barrier that ensures my users are actually interested in the product, and not just trying it out, and may help cut down on support requests, the burden that comes with free users.
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SaaS is a completely different story - customer's data lock-in, instant cancellation of service, etc. In case of online product it is very hard to abuse the system simply because you can cancell service as soon as money stop flowing. – Aku 13 years ago
There is no difference between a trial and money-back guarantee from the point of view of the conversion process: you still have to convince people to pay you. However, offering only the money-back guarantee will hurt your conversion rate as you will be trying to sell before users have a chance to try the product.
As far as designing a trial version, do not ever reduce the number of features because the experience with a crippled version is going to be different. The purpose of a trial version is to give the taste of the fully-functional production-grade application but limit it only at the point where the user understands its value. In your case, the limit can be the number tasks, projects, reports, or time (e.g. 14 days), and the limit is based on how your application is integrated into the customer's workflow.
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Actually, there is a **huge** difference. Chargeback rate is noticable lower than conversion rate from trial to paid version. Apple App Store is a perfect demonstration that low price compensates lack of trial version or even lack of quality/usefullnes. – Aku 13 years ago
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I'm sorry but you're comparing apples to oranges. **First**, conversion rate is a conversion rate and charge-backs are charge-backs. You need to compare total conversion of visitor->trial->paid to visitor->paid and charge-backs in both cases. **Second**, the purchasing experience through an app store is very different from buying from a website. There's less friction in app stores as the payment information is saved - the purchase is essentially one click. **Third**, charge-backs & conversions have their limits. The psychology of paying $10-15 isn't the same as 99¢-$5. – Dnbrv 13 years ago
Fully functional, time limited trial with no registration to download. This is the easiest way to get them to take the first step.
Money back guarantees: not everyone trusts they will get their money back. Not everyone has a PayPal account already setup to pay. They'll set one up if they've become hooked on your software and see their data they spent good time entering is trapped in it.
If you design your program extremely well and the TM method is well regarded, lazy users won't abandon it. Lazy people love saving time.
I agree with Gary, your price is too low for a desktop app. Your app however sounds a much better fit for a smartphone, being always on the user and not requiring synchronizing between work and home PC.
Imo, trial is always the way to go. Personally, I'm 16 and when I'm looking at getting things for my company, I have very, very little spare cash around. So anything which I have to pay anything for initially whilst trialling the software, even with a money back guarantee, is an absolute no-go.
Additionally:
- Something being entirely free is more attractive to the potential buyer and they're far more likely to try it out. Hopefully they'll "get hooked" and become reliant on your software, realise they can't do without it and then buy it without hesitation. I guess that it down to just how good the software is.
- Constant messing around with payment transactions can become expensive for you. With each transaction you make, your payment processor will take another percentage off it and you could potentially loosing a pound/dollar or two each time this happens.
Just my two cents, from a slightly unusual perspective. :)
I think you should provide both a trial version and a money back guarantee. In fact I think the trial version should be a free version.
You need to solve the problem of why your targeted user-base will stop using your tool after only a couple of days/weeks. Declaring that they are lazy is not good enough.
Figure out what you can do to add more value so that folks in love with the free version will feel that they really do need the paid version. Look at Evernote or the software at 37signals for examples of how others have done it. I think you already realize that most software producers don't succeed at this.
And finally, as others have stated, your price point should imply more value. I would consider something in the range of $24 to $49.
