I actually agree CC upfront is better overall than not. Depending on the audience of course (some business users don't have access to CC's without approval from finance dept).
That being said. I found a higher conversion rate via what I call "resource-based" trials. One's not based on time ('14-days') but resources/services your app provides.
For example, in our app users can create 10 free entries with no time restriction. This sounds like a good deal to the user. But what makes it effective is the type of user who ends up paying for our app, was always creating 10 entries the first day already. So it was essentially getting them to commit and signup for free, then give us their CC the same day.
I've been meaning to blog about this for about 2 years now :P
That's different from a "free trial", because there really is no way to use our app for free on an ongoing-basis without paying for it.
(Not logged in ⇒ trial never expires) = no surprised and pissed-off users.
Get the CC number up front, but still require an 'opt in' after trial expiration to begin charging. You won't start automatically charging, you'll require the user to do something -- but the 'something' is just clicking a single 'yes, start charging me' button, with no need to enter the CC at that point, cause they entered it up front.
I have no idea if that will work to get the conversions he's getting with, well, automatic conversion. But I can't help but think products where a free trial automatically starts charging your CC on a certain calendar date if you don't opt out -- are getting conversions via trickery, and is not going to build a sustainable customer relationship.
I thought I remmebered this, and just confirmed it. Go to http://aws.amazon.com/free/ in an incognito window. Click on 'get started for free'. Pretend you don't have an Amazon account and create a new one -- you have to create a new account with a credit card, before finishing up and going on to 'get started for free.'
However, with Amazon, I'm pretty sure that they won't charge you if you don't cancel in X days. They'll only charge you if you later opt in to a non-free service. (But am I wrong there?)
Nobody thinks it's shady, but then, it's a large company everyone's heard of.
I assumed the reason in part was to lower any barriers to later signing up for a paid component of the API, wit one click.
I understand why OP is doing it, but I still totally think it's shady to have you sign up for a free trial, and then start charging you at a certain calendar date unless you explicitly and manually opt out. At least, if you're doing this, you better be very very clear that's what you're doing when you get the initial sign up -- but the clearer you are, the more harm you're probably going to do to your conversions.
This is why most services these days, seem try to give a trial limited on resources of some kind rather than calendar. You get up to 4 Widgets on the free plan, you have to upgrade to the paid plan for 5. Get ads on the free plan, upgrade to paid to not have em. Get 4k page views a month on the free plan, etc. You get public repos on the free plan, need to upgrade to paid for private. Etc.
Note that the services that offer that kind of free trial seem especially beloved.
Can you think of popular and beloved cloud services that offer a time-limited free trial after which they will automatically start charging you unless you explicitly opt out? I can't think of any.
Even the new york times, when they give you an initial X month subscription at 25 cents a day or whatever, and then when it's time to renew it's gone up like 500% -- you still have to actually opt in and choose to renew your subscription at full price, they don't just charge your credit card.
If you're not ready to pay, then why the hell are you trying my service?
It's not a charity, it's a small amount of money each month.
The goal isn't to trick people into paying. The goal is to make it feasible for one person (me) to support a product by attracting those who have a business case for using it.
I don't feel good about 'capturing value' from users who forgot to cancel... but the alternative (what I'm doing) is to make them take a positive action every renewal. (In my case, the account auto-renews, but it sends the user a bill that they have to actively pay; if they don't pay, the account goes away.)
Now, some people do prefer the 'bill me every month without asking' model... but I think the right thing to do is to make this an option; one option where the account will expire if the user doesn't take positive action to renew the account, and another option to automatically continue billing until the user asks to stop.
I don't know if many others feel this way, but as a user of subscription services, this is something I think about. I know that I'm probably going to forget to cancel, and that canceling is often difficult, so generally I consider services that don't autorenew to be much 'cheaper' even if they are the same price in terms of dollars.
Provided...that the service had an easy and obvious way to cancel when I wanted to.
Yup. A bunch of my users have expressed the same sentiment. (I offer a fairly hefty discount for people who want to pre-pay, but I certainly understand that is a very different sort of thing.)
That's why I think it needs to be an option, selectable by the user. I think it's especially important to have the 'only keep it if I take positive action' for trials, but I think it's good policy to give everyone the option all the time.
>Provided...that the service had an easy and obvious way to cancel when I wanted to.
Yeah, also very important. Right now my process for that is "email us, we'll confirm with the email on file" which is... pretty bad. But I think the badness is somewhat ameliorated by my default billing method (e.g. if you just forget about the domain, it gets turned off and I don't get paid for any time that elapsed between when your account expired and I shut you off.) But it's still pretty bad.
But of course, people are missing the billing receipt emails!
Others, like KissMetrics, sends you an email a few days before billing you... but their price points start in the 3-figures.
I think a policy of "We will bill you monthly and send you an invoice every time we bill you, and we'll always refund your last month's payment if you'd like" is best.
It seems to me that he's saying that he sends reminders that the credit card will be billed and people don't cancel. But as soon as they get emailed that a charge was made, they do see that email because they're quick enough to cancel and request a refund.
It sounds to me like OP is actually going a fair job of managing this. He sends notice before billing, and a receipt after. Though I might change it so that the first billing required an opt in, with daily reminder emails in the last few days.
I'm down to maybe three places that have my CC on file. Everyone else, I enter it - every month - at time of payment. I don't exactly like this, either - there is still the possibility that a poorly written component is logging the card somewhere[1], but it's better than handing over my wallet and walking away.
[1] seen it...
You're spending more of your life entering your credit card number every month than is likely to be spent dealing with fraud.
I create a new card for every purchase, but long standing relationships (ie my VPS provider) gets a longer lasting card so I don't have to update it every month.
[1] The only time I ever enter my true CC is when bying something that requires a physical card (some airlines, certain tickets).
[2] similar to http://www.visaeurope.com/en/cardholders/virtual_cards.aspx but branded by my bank
But the markup ... say EntroPay of 3.5% makes regular usage very expensive.
There is still a matter of trust: you can say you're using a given provider, but I can't verify it. It happens that I believe that you actually are - but unfortunately it really is a judgement call that has to be made for each service provider that I want to sign up with.
I think it's a larger issue, but the types of solutions that would help have largely been rejected by the market place: centralized storage of payment data with a few trusted providers.
I have some good (and I think relatively new) ideas on how to fix it, but it would require a fairly massive buy-in from the industry in order to work. So essentially, DoA.
