Should we offer an initial usage or credit bonus (for example, $100 in free usage credits) to encourage people to sign up and try the product, and does that tend to lead to higher conversion to paid usage later?

Based on our pricing strategy in Price to Scale, offering free usage credits can indeed lower the barrier to entry and create a “risk-free” way for potential customers to try your product. This tends to drive initial sign-ups and can lead to higher overall product adoption.

Here are a few key considerations from our book:

• Risk-Free Attraction: One section explains that a risk-free pricing model – where clients “only paid on conversions” – enabled massive product adoption. The idea is that free credits remove initial purchase hesitation, thereby sparking interest.

• Conversion Trade-offs: However, our book also highlights that completely free trials or credits sometimes lead to lower conversion rates, with historical data on free trials showing rates in the 2–6% range. In contrast, companies that charge a nominal fee (for example, $7 for a trial) often see better conversion. The nominal fee helps filter out non-serious users and aligns the trial experience with real, perceived value.

• Practical Application: If you choose to offer a $100 credit or another free usage bonus, consider mechanisms to encourage eventual paid usage. For instance, offering a seamless upgrade path or clear value demonstration during the credit period can facilitate more effective conversion. Alternatively, experimenting with a nominal trial fee can serve as an effective signal of product quality and commitment.

In summary, while free usage credits can be a powerful tool to boost initial sign-ups, our pricing strategy book (Price to Scale) suggests weighing the benefits of a risk-free entry against the possibility of improved conversion through a nominal pricing approach. Tailoring your trial model to encourage not just adoption but also long-term engagement is key.