A Tiny Experiment
Will people pay for my product?
The Snippet is a Weekly Newsletter on Product Management for aspiring Product Leaders.
I will be honest. As we slowly built the billing infrastructure for this product, I wasn’t entirely sure if people would pay for the product.
Sure, Every metric that we’d instrumented said the value proposition was there, but then you know how products with seemingly compelling value propositions fall out of favor once the free-trial is over.
Over the past two years we had nailed down a market need built a functional prototype, and were running an ‘invite-only’ pilot. Our pilot users said they loved it. But did they really?
We’d recruited these pilot users based on very special filters that matched our target market. We “promised” FREE access to the product and in return, asked that they give us their feedback. For Context, this was an IoT Product—so we shipped pilot users
Hardware for FREE
a mobile app with limited functionality that they could download and use for FREE
and a New Software that had premium functionality —also for FREE but for a limited period.
The feedback was very positive. But I wasn’t convinced. The core objective of the pilot was to know if the premium features were simply nice to have, or did they provide enough value that people would keep using them even if they had to pay for them?
Of course, during the initial interviews, most users said the features were super cool and they’d surely pay for it. But people rarely do what they say, and rarely say what they really think.
Now, we didn’t have a billing engine built into the product yet, so we couldn’t really accept payments even if people were willing to pay.
So I decided to test something else that would give us a sense of whether or not people cared enough about the premium features. We also wanted to know how many conversions from free to paid users could we expect.
A few months into the pilot — I decided to take the premium software away.
This was the real experiment— where rubber meets the road. I wanted to see how many participants actually cared enough about the premium software to come back and ask that we reinstate it. I would then let them know that it will cost them $X.xx each month for us to keep the servers running and maintenance of the software. Also, we’d change the pricing on each user that wanted to keep it going to understand what was the highest willingness to pay. This way we’d validate a few things
That the premium software is valuable enough that some people want to keep using it
We’d know roughly what % of the folks on a free trial may convert
It will tell us something about the value that our target market puts on the premium features. Are they really premium?
So, we sent everyone this email…
…..and eagerly waited for a response. If nobody cared that they’d not have access to the premium features, that would tell a lot about where we stood.
…20 minutes later… the first response.
Most didn’t care and were perfectly happy with the Free features.—but about 30% of users responded to the trial expiration email. Some were pissed that we didn’t tell them well ahead of time (that was intentional), some were unhappy that the free period was over and requested we extend the trial period and some were sold on the premium features and were OK to pay.
This quick little experiment truly helped us validate that the premium features were in fact delivering value. We dived deep into the kind of personas that were willing to pay— and focused our lead generation engine on finding more such people.
The Launch was still 6-8 months away, we doubled down on building the billing engine. We had validation.
The Snippet is a Weekly Newsletter on Product Management for aspiring Product Leaders.
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