I disagree with the idea that you should never offer free pilots to enterprise customers. Some pilots do not demonstrate buying intent: they are qualifiers.
Often times pilots are necessary to get enough information to justify the purchasing decision. Salespeople always claim a product will solve 100% of my needs. The reality is that it is actually somewhere between 20% and 80%. Where it is on the spectrum will determine whether I should be a customer. I need the pilot to know where that level is.
Just because you are not asking for money does not mean the pilot is "free". I have to justify the time I'm spending on this pilot, I have to set aside other priorities potentially disappointing stakeholders. I have to request resources and people. I carry the reputation risk since I am the one driving it internally.
If you are asking me to pay an even higher price than that, by forcing my reputation risk to also include a budgetary impact, or force me to slog through procurement, I am going to skip your company, even in favor of a higher ticket-price competitor. There should be greatly asymmetrical costs incurred by you compared to me to justify that.
Edit: if you dedicate resources to a pilot then it might as well be free but lots of companies don't automatically do that is my point
Now the potential buyer is not necessarily lying or just being nice. Rather they may truthfully be unaware their brain has already decided "no". By asking for money or even to sign a non-binding agreement to purchase in the future, puts the person on the spot and forces them to answer honestly and bluntly. It is this weird, psychological trick to get at the true buying intent. And of course, even if they sign or pay for a trial, they still may decide no later. But hopefully it wasn't completely wasted because you got feedback from someone genuinely interested in paying for your product.
In the latter, adding non-free price would be a better indicator of buying intent. Perhaps that is what the article writer had in mind. In the former, though, which is where my comments come from, being willing to do the pilot is already displaying a great deal of buying intent, so adding a price on top is a net negative.
When you're in sales, it's an open secret that large companies give managers a discretionary spending limit under which procurement doesn't get involved. At all. The exact amount depends on the business, but the figure isn't hard to come by - you basically just need to ask an insider.
If you don't have such a discretionary spending limit yourself, but still interact heavily with outside sales, it's because the sales you're dealing with view you as an inside asset - credit to you, you're what's called an influencer - that allows them to get to your boss who does.
(Alternatively, you might actually be working for a small or medium business. Which is cool but keep in mind that these can be very different in this respect, in that many managers in them have little to no discretionary spending limit.)
My point was that this is not true. The cost is not zero just because there is no price. I already have skin in the game. I am willing to incur those costs on a pilot to decide whether to use your company but the decision will be based on how much benefit your company demonstrates during the pilot.
Adding a price to those costs just makes it less likely I'll do a pilot, that's it.
Adding a price only makes it less likely that some leads don't move forward with a pilot. Specifically, self-entitled businesses that expect to get the moon for free; organizations that are price sensitive enough that working with them will end up earning you very little or worse; and users without a budget or influence on those who have one. You'll of course lose some potentially good clients along the way as well. A free tier can make good sense sometimes. Most of the other times, more than a few execs will go: "Yes, please! Let's price our less profitable clients out of existence."
Agreed. There is this weird psychological trick where if you charge people more they start to value your service more or at least delude themselves into thinking so exactly because they are spending more money, it's a beautiful thing. If it fails, you can always reduce your price again!
>Never give your service away for free.*
* Except if your business model depends on capturing a large enough audience to feed them ads and generate revenue from that (Facebook, Google, Reddit).
A real life example: I am in search for an api doc solution for my SaaS. A certain "docs" SaaS costs about $1200/year for their basic service, which includes an ad for their service at the bottom of your doc pages. To not have their branding ("white label") costs $4800/yr. That SaaS is certainly taking the "charge more" advice to heart and because of it I will never try their service, and instead am trying open source solutions like docusaurus.
I agree 100% with this statement. The first startup I was involved with decided to give the product away for free to build an audience, and then attempt to monetize the audience.
The "business" felt more like a "hobby" and our users were not helpful because they had no investment whatsoever in the product.
- It's candy, and we're not here to buy candy.
- [Sigh] Because mum said so, and I promised her not to buy you any.
- But mum doesn't need to know, does she?