One thing just learned: The sooner you start charging your users, the better.
Morgan Kung
36 replies
Hey hunters,
I am Morgan, the founder of Gemoo which has been free for half a year after its first launch. My original intention is using 'Free' usage to attract users to try it out to get as much user feedback as possible and then shape it to a more mutual app. And start charging after it become a well-prepared product in my mind. But I found that such an idea limited the growth of Gemoo, which made me start to reflect on whether I should have started charging earlier.
So I’d like to share my thoughts and reflections about it, with founders who raise the problem:
📌When should I start charging? - You should definitely start charging early if you already have an MVP instead of a product-market fit product.
Why I Didn’t Charge My Early Users ❓
Gemoo Beta was released on Product Hunt on 11th, Aug 2022, it’s already over 7 months, and I didn’t charge my users till now. I know, it’s a long duration and quite abnormal.
When Gemoo was first released, I didn’t even consider charging early users as an option because I didn’t think Gemoo was ready to charge at that time, since it was just an MVP. What I desire was to get as many people to use it and give feedback, then make some improvements according to the feedback, to achieve the product-market fit sooner, which I saw as the first thing that matters.
Besides, I somehow believed If I charge a fee, it will affect the number of people who are willing to use my product. Moreover, I don’t want my users to pay for a non-well-prepared product. If the product is not ready, how can I expect users to be willing to pay for it, it might lose the reputation. I should only charge users once I’ve reached profit-market fit, that was the voice from the bottom of my heart.
Looking back now, maybe it was simply because I lack confidence in my product, and my fear: what if no one pays for it, what if the value proposition I delivered is not what my users want?
Another objective reason was: No time for pricing preparation and didn’t know what to charge. We didn’t yet have enough information to know how to price or segment the feature set.
A couple of months after the beta was released, a user asked me via online tickets when will we start charging, and one of my interviewed users said I should start charging if I want to get high-quality feedback (in case you’d like to know what I learned from my users). Then I realized that maybe charging earlier is not as bad as I imagine, even from some users’ perspectives.
💭 I’ll Start Charging Earlier If I Can Start Over
My team and I spent much time finding our market segments and target users, with many efforts but result in fewer effects. My pattern was: to release MVP and make it free to use – get user feedback as much as possible – make improvements according to their feedback – reach product-market fit.
However, the reality was not as I expected. I received valuable feedback, but not enough to determine my target audience and which market segment I should focus on.
One of my interviewed users inspired me: There is no clearer customer validation than a sale. When sales go up and so does the quality of feedback, which attribute to the difference between feedback from customers (paid users) versus users. He said: You should always listen to your customers instead of users because those willing to pay are often more reflective of your target, and their feedback is valued most. I am very grateful for his unreserved sharing.
As for product-market fit, you can only do that once you put it to the ultimate test, see how it works in the real world, and expose it to the possibility of failure, then learn and improve from your mistakes. Let the money do the talking, If it delivers value, users will be willing to pay it forward. This is what I learned recently. 📝
When you’re in the Beta stage, It’s highly possible that you don’t exactly know your market segments and target audience, and you don’t know if the value propositions are accepted by your users. Start charging maybe is a way to answer those questions.
If you know you are going to be charging for your product, start by validating if anyone will pay first. It can help you map out who will be willing to pay for your product and what will they’d like to pay, and there is no better success metric and it leads to less waste in the long run.
If I can start over, I’ll definitely charge my users earlier.
It took me so long to figure this out, so I hope that by sharing my story, founders who have the same puzzle will not be afraid of charging too early.
Feel free to drop me a message via Twitter🐥 to discuss more.
Replies
Mehdi Rifai@mehdi_rifai
100% agree customers should be charged from day 1 at least you know whether people are ready to pay for your product or not and why. If nobody pays change ideas
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FocuSee
@mehdi_rifai You're right, this seems to be the quickest and most effective way to verify if a product needs to pivot.
@mehdi_rifai a trial should be available. Why would I pay for a service that may not meet my expectation?
@rapsnippheaven a trial is not mandatory. For SaaS B2B, I opt more for freemium than trial.
That being said you will demo the app to your first customers because you've been in touch with them for some time before launch. They will see it they will test it during the call you had with them. So it's either they pay or they're not interested.
Once you go low touch and full PLG, your LP and freemium should do the work of setting the service expectations.
KloudMate
Quite a subjective case, in my opinion.
If you're focussed on growth, you might be better off with some form of free usage-based plan that's aimed at increasing frictionless acquisition, and charge them as usage grows.
But again, the best case is to charge every user as early as you can, and if you're able to do that, there's no better validation one can expect.
@pranabgohain I agree, increasing the usage funnel and then finding that opt point of usage to start charging the users.
FocuSee
@pranabgohain Yes, the willingness of users to pay for a product is the best proof that it is demanded by the market, at least by a niche. We really can't be single-minded, it's dangerous for a startup. Communicating with other founders made me realize this.
I totally agree with you, although I think the best formula is freemium. So, with the use of your product users who start free end up paying little by little.
The best way is to charge immediately if the product doesn't require free model to go viral.
Bleach Cyber
Some cool insight here, thank you for taking the time to right this. It’s an interesting balance between the two. 🤔
I'm in between launching paid version, this was super helpful, thanks Morgan!
SaaS AI Tools
This is great advice. Thanks for sharing!
100%
Don't let them have the expectation that it will be free forever
We charged on the day we launched with evoke-app.com and it has worked quite well
Especially when server costs are sky high!
HyperTest
All valid points. I will give you my reasons for charging early (even if small)
[1] Feedback from paying customers is more real vs free users. Users who are planning to pay value their time and investment 100x more than people using who have not been asked to pay. They will push your product in the right direction faster
[2] Asking people to pay is a muscle that Founders need to develop early on. Most founders postpone this expecting to have either other folks do it or the market magically tell them somehow. Nobody will do or should do it other than Founders in the early days. It builds the right discipline
[3] Interested users even for all the shortcomings of your product will be willing to pay than not. If they are not sure yet about paying your product value is not there yet. It is that simple.
So even if your product has been free for some time, next time when you are talking to a reasonably interested user ask him
'Would you consider paying $x for this every month?'
His answers will surprise more than anything else. Best
Thank you for sharing this.
Great advice, thanks!
Conversa - Videos That Talk back
Important insights. Thank you for sharing.
This is really awesome Morgan. Thanks for being so open about it, it definitely takes a lot of courage.
Starting to charge users early can help validate a product and generate revenue, but it's not always the best approach for every startup or product. It depends on the specific circumstances
FocuSee
@adamaschol34681 Yes, 100% agree with you @adamaschol34681. You have to analyse whether it fits your product form, positioning and audience before you make any business decision.
Knit API
Well said! You can only be sure of PMF when users are paying for it.
informed news
Thanks for the great insight!
Agree wholeheartedly except for the case where your app is truly going viral in which case making it free probably allows for the most uninhibited growth.
That's a great insight Morgan, thanks for the share.
I will be implementing the same next year
FocuSee
@rishabhravindran Wow, congratulations in advance. Hope everything goes well, if you need any advice or help from me, just feel free to DM me.
Completely agree. A paid customer will give much valuable feedback then a user. As he/she will have intent of getting most out of the investments they have done. Free products are good to achieve MVP, but paid customers will help achieve product market fit