We're starting to have meetings with potential alpha/beta customers and as part of the call (typically) towards the end we'll be asked about the pricing.
At the moment I'm telling them "we're looking for few companies to partner up to use the platform and provide valuable feedback. During this stage, there is no fee to use the platform."
To me, this sounds a bit desperate. Like..."pretty please use my system" :)
Is there a better approach to handling this?
And lastly, is it better to leave out that we will commercialize it in the next phase? I don't want to scare them away and make them think the costing will be outrageous once it's commercialized.
Thanks in advance,
Ps. Just want to say thank you to the community here, it's really been a very helpful resource!
The statement you reference above is one I've used and one that some of the most successful enterprise companies have started with in their early days. Not desperate at all. If you want to get more specific about how long you'll offer the platform for free, or what you believe the final pricing range will be (and you should be thinking about these things), then that would screen out some customers that are just looking for freebies.
How about telling them: "We have this platform, that can help you to do X, Y and even Z. Right now we are in beta-tests, and it would be great to have company ABC as part of it."
If you offer them value and they like the product, they will be willing to pay for it - companies understand it.
But first you need to show them, how your platform is going to help them earning money, attracting new customer, solving their problems, etc.!
I think the question you're asking is an amazingly important one. Part of the answer to your question lies in what your business model is. In your business model is every customer going to be expected to pay something for using your product ? If the answer is yes then you should be asking them to pay something. If the answer is "no" and you have a freemium model then this could be different. I'm going to assume that this is not freemium, because you have pricing in the next phase.
My advice is generally to get pricing tested as early as possible. Changing pricing later is really difficult. If you think pricing is going to scare anyone at any phase, then that is a significant risk. Aside from the technology, you should be testing the riskiest parts of your business model as soon as possible, and if pricing is one of them, get it tested... quick !!!
In my experience, any alpha users that i've had pay for anything that we had built were much much better at giving feedback and helping us build out our product, because they were materially invested. That's the kind of alpha/beta testers you really want. If its free they just don't engage as much. They'll ask you for features that are generally wishful, and you end up chasing your tail for them.
The other more subtle thing that happens is that it helps you devise your sales and objection handling strategy from the get go. Building a startup isn't just about the tech, its also about having a scalable, repeatable sales model. Sales material, pricing and objection handling etc make up the "code" for the sales aspects of your business. Just in the same way you would spend time with the tech fixing bugs with code corrections, you should be spending time on fixing your sales "code".
In summary charge them a fee... whatever it is. I know its hard... but i promise you... you'll thank me later !!!
Hope that helps... and good luck :-)
Great answers so far.
I am a bit fan of focusing on value rather than features, so I would start by showing them value and how they can get in on the ground floor, and be one of the first to gain this value. If you feel that your product does not illustrate enough value at this point, then rework your Value Proposition a bit, and really think as if you are your potential customer.
You can even offer to "feature" the company(s) in your blog/site who are a bit hesitant, however, I would caution against bringing in a company to your beta test who does not see the value and who might not be a willing participant. Feedback is tough to collect and sort through as it is, and having someone in your beta testing who does not see the value could be both good and bad.
Focus on the value and potential value, and see who bites on your hook. If no one bites, then you really need to look at your product's value to the market.
I think it is very important to show your user that your product is solving huge problems for the industry. If you can put problems in to perspective then it becomes very easy to make them realise the price:problem ratio on a later stage, moreover thru your partnership program they will also get a chance to try technology without any initial investment risks.
So they should probably take it..
Thanks a lot for the incredible answers here.
In the end they asked the price, I went with the original approach:
"We're looking for few companies to partner up to use the platform and provide valuable feedback. During this stage, there is no fee to use the platform as we're most interested in building long term relationships. In the next phase we can negotiate a fee schedule that works for everybody."
Great news, they sounded very interested in this approach as a way to get the system they need but did make a comment that if they're helping us as an early adopter to improve our product that they have some IP.... they noted that this is something they'll discuss internally.
As I understand with most startups, there is a very basic agreement (1 or 2 pages) that the beta company will typically sign removing the liability of the startup over that beta period and that any/ALL feedback becomes the IP (intellectual property) of the startup...
Is there something I'm missing? It seems that point could in of itself be a deal-breaker... Any thoughts?
La mejor parte de un negocion es poner el 80% de tu tiempo en 20 de las persona que te produciran el 100% de tu ganancia
Something in my mind is try the best to get into incubators/accelerators. As long as you are in, you will get tons of alumni who usually trust you a lot and will support you by using your platforms without worrying about prospective charges, since entrepreneur alumni share the same experiences of bootstrapping business. They know how much initial seed users mean.
Great answers so far. It is helping myself out as well. Thanks guys!
Two aspects are at play here I think.
1) no it does not sound desperate
2) yes you are missing the most important part of any company, do we provide value in a way that let us monetize it?
So yes I would tell them there is a fee. You could say, you get a discount since it is beta but on the other hand they get stellar support and attention during the use of the product I suppose.
in addition I would like to add that it might be valuable to slower the sales pitch. Ask to demonstrate the value of your product so they can determine the value themselves. Let them ask what the price will be. If they do not ask what it will cost, they are probably not seeing the value.
Lastly, try not to ask customers to help you figure out what the value might be. Sell the value proposition, listen what parts of the value proposition they agree on and put a reference value on that proposition yourself. Customer time is valuable, do not waste it with asking them to help out as a sort of product manager.