

Negative Option (Collecting a credit card at free-trial signup time) - there
http://www.braintreepaymentsolutions.com/blog/negative-option

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j_baker
Personally, I think that any business model that relies on your customers
forgetting to cancel your service is fundamentally flawed and consumer-
unfriendly. And let's face it, that's what you're doing when you use Negative
Option billing, even if you provide all the disclosure in the world up front.
If I love a service, I'll sign up for it after the free trial.

~~~
Pow
37signals does this, iirc... Do you think they're consumer unfriendly and,
dare I say it, evil?

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BRadmin
37signals offers a 30-day free trial for paid plans, but clearly states: "If
you cancel a paying plan within 30 days of signing up you won't be charged a
thing. We'll send you an email 5 days before your first charge to remind you."

In addition they also offer FREE plans for their services - which require no
CC at sign-up and allow you to upgrade at any time.

Edit: Any comments on the downvotes would be helpful as I was just trying to
supply more detailed information on the actual process being discussed.

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sayrer
This article reminded me of RescueTime. I think RescueTime might be OK, but
not for me. I tried clicking the unsubscribe link in the emails, which did
indeed unsubscribe me instantly. However I did not get to opt out of paying
them another $75 at some point in the future that I can't identify.

Ah, it took some digging, but I found the account link. This could seem
unfair, since the link was actually right in the middle of the page. But it
was small, hard to see, and it didn't uninstall the RescueTime bot from my
computer.

Now I have an OS X process running for a service that charged me one year in
advance. And I have to go find this stupid thing. Just fuck off and die.

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dotBen
The problem is that "1 month free trial" != "30 day money back guarantee" and
many companies conflate the two.

If there is a 1 month free trial, then you shouldn't be _billing_ a credit
card upon sign up (whether you take it up front or not is a separate issue).
Billing the customer and then offering to refund within the month if they
don't like the service is not a free trial.

Offering a 30 day money back guarantee seems the most sensible for most SaaS
plays IMHO. If someone likes your service, they should be happy to pay even
for the first month. If they didn't like it, then they get their money back.
Seems reasonable enough.

~~~
jyan
I agree completely.

I think one reason companies charge you the money immediately (for the "1
month trial") is to test out the credit card. I know some companies that
charge a cent (or something) then refunds that to verify that the credit card
is valid.

~~~
dotBen
Well, that is a crap way of doing things because in credit-card world you can
'hold a charge' for $x rather than actually execute the charge transaction.
Holding a charge checks the credit card can pay the dollar amount and I
believe also reduces that against your spending limit - but it doesn't
actually put the charge on your bill. It only lasts a short period of time and
so if you don't complete the transaction the charge is dropped altogether.

It comes down to whether your credit card processor exposes to you such
functionality and whether you are smart enough to know to use it.

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rsepassi
Does anybody have good data on conversion rates for credit card info at the
beginning of the free trial or end of the free trial? That is, let's say you
e-mail the user 5 days before the 30 day trial is over in both scenarios, but
if they entered the credit card info beforehand, then to sign up the user has
to do nothing, but if you require it at the end of the trial, they now have to
enter credit card information to continue. So basically you have to add the
credit card burden at some point; do you get a higher conversion if you
increase the barrier for the trial (by asking for cc info up front) or the
barrier for continuing (by asking for it at the end)? I'd guess that asking up
front has the higher conversion, but I'd want to see the data.

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gte910h
I hate when services I really want (many hacker news types of businesses for
instance) do not let me give a Credit Card up front. I mean sure: Credit me a
free month of service. But damn, don't make me give you one 30 days later if I
want to provide one now.

~~~
sabat
Sounds like they're mixing up Free Trial with Sign Up Now. Free Trial: I want
to try this and I'll pay if I like it. Sign Up Now: I already like it and want
to start immediately.

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there
due to this discussion, i spent a few hours this evening changing the signup
process and backend billing scripts for corduroy (<http://corduroysite.com/>)
to no longer require a credit card to start a free trial (but still allow one
to be entered if desired, since someone here mentioned they prefer to do
that).

hopefully it won't result in an influx of new accounts that use it once and
never return.

~~~
daemin
I would love an update on this in a month or three to see what the results are
of this change. * Do signups increase for the free trial. * How well do the
free trials convert to paid. * How many people put in their CC details up
front.

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Luyt
Apple just lured me into doing this, because of their new Mac App Store. [I've
only tried out some free apps yet - TextWrangler looks interesting].

