My cofounders and I have been debating this. On the one hand, we definitely want to show some revenue sooner than later. On the other, we’d like to do a lot of surveying with these early customers, and we understand that their time and feedback will be part of our compensation. Plus, we could really use some brand ambassadors, and we want them to be as happy as possible with their early experience. How would you approach this problem? What are we not considering?
We've always done beta pricing for our new products. For example, our latest product clearalias.com as well as our previous product reamaze.com all adopted the beta pricing model to attract early adopters. We set a beta price that's not only reasonable for an early phase launch but also set the expectation that pricing will definitely change once out of beta. They're a) getting in on the ground floor b) if they provide us with feedback and help build out the product together we can even grandfather their rates c) leaves plenty of room for growth.
Set the price, then waive it for the early in customers who will give feedback. Starting as free and then trying to raise it is much harder than setting your price and waiving it for a period of time.
Yes I like Dane's idea. Make sure you set the fee - the true fee that the service is worth. Make sure people see this so they appreciate the value from day zero. Like Dane says, increasing the price later is very very hard.
Then set out to look for your beta testing group. It might even be pre-launch, or a stealth mode kind of thing. But they are getting it for free (or at cost if there are some real physical costs thant you simple have to cover). They are getting this deal if they agree to give you feedback, it is an open 2-way relationship and they will appreciate being part of your "journey". They could even be journalists, or maybe that is a 2nd phase once the beta group have ironed out the real big problems.
Do not try to influence any of them with "can you give me a great review to put on our site". But obviously if you do get raving reviews then ask them if you can use that quote on your site and in PR. This is the stage where you get to find out what people truly think of your service. It must be a very honest process. If they hate it or it falls flat on its face then let them tell you. Make it a productive process so you learn.
Once you've got the above done, possibly re-iterated a couple of times till everything is working well, then go out and start charging - start getting that revenue in - that is why you are doing this. You may still decide on a small discount for the first 100 users or something but don't give it away or you devalue from day 1. Again, always ask for quotes and feedback. If good then use these in your promo. Having quotes from real paying customers is key. It is at this point you can hold your head up and say "yeah people are paying for this and they like it". You are on your way...
Agreed that you need to charge full value for your product, although there is nothing wrong with rebating some or all of the price for people who provide you value in another way. For example it's not a reward for the positive character of a review, it's the depth of detail and frequency with which they engage you with honest and useful feedback. Reviews are generally not valuable, but feedback and engaging engineers and designers on utility and such has value. So maybe there's a certain amount of regular engagement required (30 minutes a week on a phone call for 4 weeks), or maybe there are some detailed questionnaires that walk through specific features and ask for feedback about how these met expectations. Stay away from ratings scales and stick to narrative commentary. More questions like: Which functions were difficult to locate? Describe a function that did more than you hoped for. Steer away from yes/no questions and try to get real conversation going.