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Doug Nebeker ("Doug")
Do you have opinions on which nets more solid sales: trial period or money back guarantee?
My software is a combination of VBA programming and formatting in MS Word templates. I do have a 30 day trial right now but I have not been marketing the software. The impression I get from the few people who have gotten the trial is that they are either 1) competitors who want to check out my product for free, or 2) potential clients who find that the formatting in the templates solves 80 - 90% of their frustration - so why bother actually buying the actual software? Once the trial expires they can just make copies of the documents they already made.
So I have been thinking that a money back guarantee would be better. Hopefully once they've paid they won't bother to go seek out a refund if they're happy with it.
However - I'm having a new website developed and planning a marketing campaign for my software, and everyone at the web development company and my business partner/husband keeps pushing for a trial period instead of the refund. And I just started another thread on here about FastSpring having a 3.5% fee for refunds.
I recall seeing a thread about this on here that I can't find now where I thought people were saying a trial was better 'cause people won't break out their credit card to test the software. But I was just reading another thread on here were everyone was discussing refunds and money back guarantees like that is the norm.
Lastly - one web developer suggested I put a watermark in all my templates and set the watermark so it can't be removed until they pay. I could do that but while it seems reasonable for trial software, my clients are very busy and will probably abandon testing if they can't test on real documents. So that could really irritate them. Once the software portion is uninstalled they would be able to remove the watermark and use the template for formatting anyhow (if they're savvy enough).
So, I'd love to get some insights on which you think is better and why. My goal is to maximize sales that stick.
Thanks so much,
"So that could really irritate them" -- Yes, enough to pay for the full version. :)
Anyway, to answer the question: the general consensus here is that a full refund is always the way to go, because they're going to get a refund (via chargeback) with their credit card company anyway, if you don't offer it.
So it's nicer to do it for them, instead of their bank getting involved and making it bad for you in the long run if you get repeated chargebacks happening.
In general, when your product is a de facto industry standard, you can get away without a free trial, maybe even without a money back guarantee. But when you are just entering the market and don't have funds for a massive outbound marketing campaign, you better remove any and all obstacles from the conversion process.
The above may not (fully) apply in your particular case, as it all depends on your market, pricing, promotion strategy, and so on.
Can't you A/B test it?
Sunday, December 29, 2013
Free trials have indeed a positive impact on chargebacks. But you should remember that the real threat in chargebacks are the negative statistics that cannot be reversed. Moreover you might win 100% of all disputes, but you will still suffer losses when it comes to processing fees and penalties, it gets even worse if we get the time factor into the picture. It is better to avoid chargebacks altogether. Therefore, in addition to free trials, issuing refunds and having a clear refund policy, as well requiring acknowledgement of it from your customers during the purchase would be a better solution.
Regarding the nature of the free trial itself. It's a tough one, There is a multitude of trial models out there. What is important is to identify which are the key features within your product that drive sales? As I understood from your post, time is an impediment for your target users. Going with a time-unlimited, but feature-limited trial could be an option. This model poses some challenges as well. It really depends on product's set of features and customer persona.
The bottom line is issuing a refund is always cheaper than getting into a chargeback dispute.
Sunday, December 29, 2013
As someone who deals with Word a lot, and hates it, what is your software anyway?
Sunday, December 29, 2013
Thanks for the responses.
The A/B test is an interesting idea...
Based on some responses, I don't think I was clear on my question so I'm going to rephrase:
Is someone more likely to become a permanent customer if they can download a free 30 day trial of software and then pay to keep it.
Or are they more likely to become a permanent customer if they have to pay to download the software initially, but they know they can get a refund if it doesn't work out for them.
The people helping with my website are pushing/assuming I'll do a trial software, but my feeling from the limited interactions I've had so far with people who found me on the internet (maybe 15 in all) is that those who I give a trial to seldom come back to buy the software. But those who buy it after just seeing a demo, seem happy and don't try to return it unless there is a technical issue with their system.
Right now I'm torn between the notion that many people will walk away if I ask for credit card info up front and the notion that I'll avoid unserious people if I require the CC info up front, and those who provide it won't bother to return it. IOW, the fact that they might be too busy to get around to testing and buying the trial would work in my favor if they'd already paid - and are too busy to ask for a refund if they're not really using it.
Regarding a refund - I would definitely issue a refund to anyone who already bought but is still in the trial period. Probably to anyone who asked unless they wait a year or so. Even then it might be best to just give the refund...
@AC my software is a collection of macros and templates for professionals, right now lawyers, that help them create and format their documents. It streamlines all kinds of repetitive tedious (and confusing) tasks. One example would be that it will apply and format multi-level outline numbering (I., A. (i) ) and make it very easy for them to modify their outline (Bold and underline level 1 of the outline throughout the document) and then they can click a button and it inserts a table of contents, sets up section breaks, and formats the page numbering for the table of contents to be lower case roman numerals. If they customize the outline they can save those settings to use in future documents. That's a formatting example, it also creates new documents they use a lot like letter, memo, pleading, proof of service, etc.
Maybe I've misunderstood something, but why not have both ?
If you only have a trial period some people will buy your software and then ask for a refund. You're going to have to give them money back unless you want a chargeback.
If you only have a money back guarantee some people will be put off having to buy and install your software to find out if it's something they need.
A third option is a subscription type model. In your case you might offer a low initial price to get people interested, say, $30, and then each update that your user downloads is an additional $5.
Koan, in my "trial" scenario they download the software and it only for X amount of time and you don't have to give payment info or part with any money until you click a button in the software to buy and register it. In that scenario, there's no money to refund because (theoretically) they wouldn't pay for it until the trial period ended.
The other scenario would be a money back guarantee where they can't download and test the software unless they put in their payment info. In that case I could either refund the money if they request a refund during the return period, or just not charge their card until the end of the return period. The latter sounds best to me except for the concern that they won't realize what the charge is for due to the time that has elapsed.
I am also considering the subscription model but I'll probably start with one of the other two.
In your second scenario you have
a. pay up front without a trial, or
b. charge at end of trial period
which is almost the same as what you proposed in the first place.
The problem with a. is that you put people off from downloading and discovering that your product is essential to their existence.
The problem with b. is that if you charge at the end, you can still get a chargeback anyway.
The idea is that you take the money and then users will feel obliged to pay if they haven't requested the refund in time. In the user's mind, the money has already been spent; due to the time passed since the charge it's harder for them to justify a chargeback.
Don't do b. for the reasons you said yourself.
Based on my experience, I think the risk of chargebacks/refunds is overrated. I've had just a handful in seven years of indie development, and the majority of those were with Apple / Mac App Store, where the store doesn't offer demos and it's not even a chargeback, just Apple refunding money before they pay me.
A clearly stated policy of a 30-day demo and no refunds is a more than adequate policy, in my view. Customers need to perform due diligence before putting down their money--I certainly do--and if they don't, it's their problem, not mine.
Monday, December 30, 2013
Emily Jones: "Right now I'm torn between the notion that many people will walk away if I ask for credit card info up front and the notion that I'll avoid unserious people if I require the CC info up front, and those who provide it won't bother to return it. IOW, the fact that they might be too busy to get around to testing and buying the trial would work in my favor if they'd already paid - and are too busy to ask for a refund if they're not really using it."
1) You will avoid unserious people if you ask for CC info up front. You will also lose serious people. If I have not yet decided to buy, asking for CC info is a big red flag to me. I stop at that point.
2) Paying and not being being able to test due to being busy is not very economical for me. A good thing I have my policy in item #1.
Monday, December 30, 2013
Kevin Walzer: "Customers need to perform due diligence before putting down their money--I certainly do--and if they don't, it's their problem, not mine."
Unless they make it your problem: chargebacks, negative reviews, etc.
Monday, December 30, 2013
Thanks all for the additional feedback. It sounds like the demo version of the software really is the best way to go. I too am put off by a request for CC info up front.
I want to avoid the people who download the templates and never buy but benefit forever from the properly formatted documents they just acquired for free. (Hence the watermark idea.)
But I probably should not put so much energy into focusing on the inadvertent freeloaders and spend more time working on making the paying clients happy... Ironically, I give people who ask free boilerplate templates all the time, just to be helpful. I can look at the demo that way. Those people probably wouldn't have bought anyhow.
If it turns out I'm not having a good conversion rate I'll revisit the "pay to download" idea.
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