Jun
18

Name your price. 4 Reasons why a free trial doesn’t work.

posted on June 18th 2014 in Tips and tricks with 0 Comments

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So you have an opportunity to undertake a trial with a big brand and the question of pricing comes up. How should you play it? More and more start-ups now seem to be adopting the ‘free trial’ strategy. The rationale being that a free trial will get you a valuable ‘foot in the door’ and will hopefully (if the trial proves successful) lead to a longer term ‘paid’ arrangement in the future.

However, in my previous life as a Brand Director, of all of the  ‘start-ups’ (or agencies for that matter) that we worked with, none of these relationships actually started with a free trial.

So why was this? Here are 4 reasons why FREE doesn’t work for trials with brands:

  • Firstly, brands don’t expect a free trial. They expect a good price (like everyone does), but they aren’t looking for ‘freebies’. If you offer your services for free, they (brands) will gratefully accept and in turn, they will hide their surprise very well. However, it isn’t expected and therefore, it isn’t needed.
  • A free trial can damage the perception of your product and yourself.  A Marketing Manager may feel that as the  tech is free, it isn’t that special (not really  cutting edge) and therefore, it doesn’t feel like a serious investment for the future. Also, a free trial offer could be perceived  as a ‘desperate’ move to get business (if the product was that good, I would expect to have to pay for it). These misperceptions will have a serious impact on your chances of working with a brand in the longer term.
  • In a ‘free trial’ agreement, the brand has no ‘skin in the game’ . With no budget monies needing to be released, there is nothing for the Marketing Manager to be accountable for. Focus follows investment and a ‘free trial’ will be at the bottom of a Marketing Manager’s list of things that need to work. A ‘free trial’ project will be  ‘out of sight’ and ‘out of mind’ from day one.
  • Finally, even if you do complete a successful free trial, you will still need to negotiate a ‘price’ for the next project and it is much harder to get to a good price with an initial ‘reference point’ of £0.  For example: if you want to charge a brand £50k for the second project, it is a much bigger step to negotiate from £0 – £50k, than it would be to go from £10k to £50k. It is also easier for a Marketing Manager to internally justify a ‘larger’ longer term investment if a successful investment was made for the initial trial – it will be seen as a less risky opportunity.

So I would propose that ‘start-ups’ should always charge something for a trial, even if it is a basic ‘set up’ fee. Ensure that the Marketing Manager has to release some budget money. This in itself will ensure that you appear on budget reports, it will ensure that you will be discussed and most importantly, it will ensure that you are on the radar. In today’s world of focusing on ROI, give the brand the ‘I” (Investment) at least? It is the best place to start.

 

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