Should You Make Money With Your Early Customers?
This blog explores strategies for acquiring and learning from early customers and emphasizes the importance of paid validation.
I have discussed variants of this question multiple times recently with entrepreneurs. There are many different viewpoints and no clear answer, although definitely some things to watch out for given the path you choose. Here are a few of the paths and some thoughts on each.
Free to start
Some businesses want to start with a free version to get as many customers as they can and/or to reduce any friction from getting people using the product. This can work well in a freemium model whereby the free version is super simple and there is a clear path to upgrade. This also helps you get more customers early, although I would argue you may not be attracting the right customers and as a result the feedback may be all over the board. I also think this may delay you finding out if customers will actually pay for your product and what the business model will be; I would rather find that out earlier than later so I have time to pivot.
Pay something, but the amount doesn’t really matter
This is my preferred option. The amount can be trivial (so it is not about the money), but making a customer pull their wallet out to pay something is one further validation point. Everyone will tell you they love your idea and would use and pay for your product. But until they actually do be careful believing what they say. I also find feedback from paying customers is infinitely more valuable than feedback from non-paying customers. You can refine the pricing and economics over time, but the most important thing early on is to get the right customers using the product and providing quality feedback so you can iterate quickly.
Establish your price point before pushing further
Sometimes you may be worried about setting a bad precedent for future customers if you price the first ones too low. This can lead you to haggle over price and elongate the sales cycle just to get the price right. While certain industries may have this dynamic, I would argue that most do not. You can still start with a base price point, but offer a discount to your first customers in exchange for some marketing benefits (webinars, white papers, testimonials, etc.). Your product will also likely evolve enough from your first version that you can justify more value to future customers.
As you can see there are multiple paths to choose from. I generally encourage getting early customers to pay something greater than zero, but really focus on the learnings and how to iterate quickly on your ideal customer profile and value proposition.