Asking for credit cards upfront changed my business
I've been building magicsalesbot.com for about a year.
It's changed, pivoted, welcomed about 2,500 users, and only reached $1,100 MRR at its peak.
It was always free to sign up. Only after so much usage or so many days, I'd ask them to choose a paid plan to continue. I thought it'd be a great way to make the product perfect - after all, if they'll want to keep using after the trial, then I've found PMF, right?
But a year on, there was still no growth and users only spoke with me begrudgingly.
But last month, a free user told me they landed a $70k sales deal the first time they used my product. It was then that I decided to CC gate my trials.
A month on, it's the best thing I've done.
Revenue went up 20%. Users started talking to me, even if they weren't converting to paid. I began to understand who my users were and what they wanted from me, and what would make them convert.
I cannot recommend CC gating your free trials enough. It puts everything into neat little compartments. People signing up? Good, they're finding you. Putting their CC down for a trial? Good, you have a compelling value prop. Converting from trial? Good, you delivered on that prop.
I wanted to wait until my product was "in a better position." It is now in a better position, only because I asked for CC up front. Don't make the mistakes I made. If you're struggling to get traction, try this for a month. If you're not really getting customers anyways, what do you have to lose?
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Saw this thread in the IndieHackers newsletter, and was quite surprised by some of the comments. Thought I would add some anecdotal experience / data to the discussion that might be of interest to people who are considering whether or not to use carded trials.
Background/source - I make Ghost.org - $4.5M ARR / 13,000 customers, and we've experimented extensively with trials, both with and without cards — and the ultimate motivation for using carded-trials, for us, was nothing to do with conversion rate. More on that in a moment.
First, I think it's important to mention that every market is different - and consumers in different demographics have different expectations for how much friction is tolerable as a part of the signup experience. Extreme B2C markets (say, the iOS app store) are typically extremely sensitive to even the smallest of hurdles when it comes to trying out a new product, while at the other end of the spectrum large B2B/Enterprise customers would never dream of signing up for a free trial in the first place. They want a sales call and a presentation.
It's unhelpful to make definitive blanket proclamations such as "Asking for cc upfront is the kiss of death for the majority of small businesses" — because there is no comparable majority of small businesses, and the truth of the matter is "it depends."
When Ghost(Pro) launched in 2014 we initially had no-card free trials, because we wanted as many people to try the product as possible, with as little trouble as possible. This worked great, and we got lots of signups. But we also got side-effects that we hadn't planned for, which was spam. Because of the type of product Ghost is (a CMS/website hosting platform) our free trial became an instant magnet for automated spam, where people would spin up thousands of dodgy sites for the sake of generating links or spamming affiliate codes. If your app is accounting software, you wouldn't ever experience this problem - but for our business it was a real challenge.
For a long time we worked to counteract spam with other methods, but none of them proved to be effective, and after several years of wasting a huge amount of resources trying to counteract spam - we decided to change our signup flow to one that asked for a credit card up front. And, just like that, the spam problem disappeared.
Because our motivation was spam prevention, and not "tricking people into upgrading" we set our trials up to not auto-charge at the end of the trial period. You have to enter a credit card to create an account, but at the end of 14 days... nothing happens. The app just stops working and asks you to pick a plan. If you don't, then we never charge you and after a while - we purge all your personal data, and keep things nice and clean.
Now, although conversion rate optimisation wasn't the goal of the change - having tried both models at scale, we did gather a lot of (real, not fictional example) conversion data to compare and contrast the two. The short answer is that there was absolutely no difference.
Trials without credit cards acquired far more initial signups, but far fewer converted to a paying subscription (about 2%). Trials with cards resulted in fewer signups, but at a much higher conversion rate (about 25%).
Overall, if you look at our MRR growth chart from before/after trials without/with cards up front: There is no change in trajectory.
There were big changes in lots of other areas, though. As well as having less spam to deal with, our infrastructure costs also went down (each new instance of Ghost is a new Node app, and that gets expensive quickly when you're buying server RAM to be able to run every single one) - and our support burden went down dramatically, too.
For us, adding credit cards to trials was one of the most important changes we ever made to the business - and it's quite likely that we wouldn't be around today if we hadn't made that change.
But, as I hope I've illustrated with this lengthy example: "It depends" — your business may operate in a different market, with different unit economics, and different parameters that determine whether it will or won't work in your situation.
After a decade of doing this, I think the main thing I've learned is that there is no definitive "best" way to do anything. It always helps to keep an open mind and consider that there are many different approaches that can work.
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Thanks for sharing John. Appreciate you chiming in
I used to do free trials. Then switched to monthly plans. Then switched to annual plans for my community Founders Cafe
Before- I had low retention, low engagement because flakers kept joining my community.
After- I have HIGH rentention, and high engagement, because people with significant skin in the game -- the believers -- are all in together.
Could not agree more. GATE IT!!!
GATE IT!
"Free trial is a Samurai sword: unless you’re a master at using it, you can cut your arm off"
Don't do Free trial until you get the value your users see to upgrade.
It's an acquisition model and NOT part of pricing!
What you did was really inspirational, since you cherry-picked🍒 valid leads from traction.
Even though, starting off low (in pricing) and with much flexibility (free trial and optionality) seemed the most obvious choice, users ask for specifics and leverage that freedom, leading to slow growth (costs money/productivity).
Did you use any other monetizing technique, or was "just" the CC up-front?
I post one pricing tip per day on Twitter .
Would love to know your takes.
Thanks Kod - followed!
Nice, congrats on the growth. I always hated when companies asked for CC right off the bat but I guess it helps to retain users.
Great that it worked for you. But not only B2B or B2C. Also depends on what you are selling. If the value you provide is non-monetary like greater convenience, time saving, I will not CC gate it.
If the motivation is monetary, eg. to increase sales, increase leads etc, people can easily work out the cost-benefit ratio. As a common saying goes, sometimes you need to spend some money to make more money.
BTW, I believe your ROI calculator is another factor that helped conversions. It helped to justify paying for this service. Did you do this before or after the CC gating?
I did it before! Only thing is - I really buried that ROI calculator. I should probably put it on the pricing page.
Charging from day 1 is the best way for validation. Congrats on your growth
thanks!
I'm currently testing out a hybrid approach for Zlappo by giving my users 2 choices when they sign up:
Get a 7-day free trial, no credit card required -- this is the lowest-friction path.
Get a 30-day free trial, if you provide your credit card -- this is the incentivized path.
The CC-upfront trials convert at about ~50%, while the ones without credit cards convert much less, at about ~10%.
And I enable Stripe's email reminder function before charging them, with a link to cancel if they don't want to continue, thus keeping refunds low and minimizing surprises.
I find that, as consumers, we hate it when companies ask for our credit card upfront.
But that's because, deep down inside, we know we don't want to pay for it.
If we have even an iota of purchase intent, putting down your credit card to get month-long free access is a no-brainer.
What I like about CC-upfront trials is that -- apart from its much higher conversion rate -- it adds to your MRR right away, you know there's an impending invoice coming your way, assuming they don't churn.
If your value proposition is strong enough, potential customers will not be put away by the credit card requirement, and you're also more likely to attract serious buyers instead of freeloaders.
Congrats! I currently offer a free trial, but I'm seeing a lot of users sign up and then immediately cancel. I was thinking of doing something like "$1 for the 1st month" or "Pay for a month, get 2 free" just to ensure users have some skin in the game when they sign up - has anyone had experience with pricing strategies like these?
That's a bold move, but great to hear it works for you. It's one of those things that you can't be too sure about.
I've just created a new product and I've also decided to go the CC gate upfront route. So far so good. This works because I've built a small audience that trusts what I have to say. Not sure how well this would work out if I was starting out from scratch saying hi to the world.
My developer said it was not possible to collect a user's credit card via Stripe and charge them 7 days later... was my developer just wrong? LOL How did you set this up in Stripe??
check this out - when calling stripe.checkout.sessions.create, add this object to the call: subscription_data: { trial_period_days: 7 }
then, after 7 days, they'll get charged!
Brilliant!! Thank you :)
Fire your developer lol.
Yeah that's wrong. What royle descibed below is for trials. But you can go even further, and collect a payment method without setting up a subscription. All detailed in the setup intents docs: https://stripe.com/docs/payments/setup-intents
This is amazing! What would me invaluable for me to also know, is how much traffic were you getting before doing the change?
about 100 visitors a week!
I forget who said it, but if you're afraid to put a "buy" button anywhere on your work, you never know if it will be a viable business or not. Just try it, you'd be surprised at what people would pay for. It's a transaction that people either grow with or will abandon. There's no right time to ask for money.
Great to hear it worked so well for you.
In my case (B2C educational website) it was harming the acquisition horribly.
Funny enough I tried trials with CC, trials without CC, multiple iterations of freemium with limited features and all of that worked worse, than feature limited one time use product demo followed by a paywall.
Wow! And just like that, a new business decision has been made. Now I have to update my products sign up process, it makes sence. Thanks for sharing!
let me know how it goes! happy to swap DMs if you're thinking through ideas. i'm on twitter @ryan___doyle
Congrats on your growth ryan. btw what service do you use to cc gating your app? i mean do you build it from scratch or use service like stripe.
I use stripe - but here are the specifics:
wow, thank you, I learn a lot from you :)
Thank you for sharing, I'm thinking of doing this myself, before I had a freemium plan. Now it's a 14 day free trial with no credit card required upfront. I changed to this less than a week ago, I want to give it maybe a couple of months like this to see how it goes, and then I might switch to requiring a credit card.
And how do you do it, do you put them straight on the monthly plan, or do you give the them the choice between a trial on the monthly plan or on the yearly plan?
might as well!
I give them the option of 3 different monthly plans. I'll play with other pricing strategies later.
So interesting as I feel there is no right answer.
I am now building my next project and I think it will be 2 weeks free or so but after a 6-8 month period I hope to move to CC
Thank you for the input man
I do a mix:
That way I don't have any friction to acquire new users into the funnel and if someone wants to try the full potential and test different setups they can with the free trial before paying.
Personally, if you CC gate your free trial, it will leave a bad taste in my mouth and I will 100% avoid trying your product out.
If I desperately need whatever your product offers, I will go out of my way to try your competitors first.
I did cc gating for my free trials too, but more as a filter for spammer, and to get higher quality customers. Would still do it, despite everyone telling me otherwise.
Glad it works for you. I personally would never ever give out my CC details until I am sure I want to keep using the product. In fact I have a special CC without any money on it that will bounce.
Mind you - I am from the EU. Especially for Germany I feel confident enough to claim this will not be a good move unless you have some serious(!!) street cred. Actually - probably not even then. So be aware of the differences in markets and cultures.
If people have to provide the CC upfront they might be more motivated to try. But what does that say about your onboarding? Are the free trial user seeing the value? If not - why not?
If the end of the trial hurts enough because people lose something of value, I am sure they will convert. Maybe the problem really was somewhere else?
Just playing devils advocate here.
Totally understand this viewpoint. When selling to businesses like I am, I'm trying to think about capitalizing on the motivation that brought the business to my site in the first place.
If they're feeling the pain in their sales strategy enough to search for a solution, let's get them in and all set up so they don't have to think about it any more, and can just start experiencing the benefit.
Of course, there's something to be said like "if they don't come back to pay at the end of their trial there's not enough value." There's truth in that statement, and there's also truth in the idea that not coming back to pay after a trial could be due to a hundred reasons.
Good point on the target market. B2B vs B2C might also be very different.
If it's just an employee, it's not really their money - while a consumer is paying out of their pocket. Of course there are budgets, but I'd claim that paying out of your own pocket will still "hurt" more.
Is a good point. But solving that - isn't that the exact value that would be taken away at the end of the trial? Why wouldn't they pay to keep the service then? Should be a no-brainer. Just because it needs another action?
I'd be a little sceptical on the correlation vs causation angle.
But I guess with the human psyche - these things are complicated.
As long as it is better than before - all is good :)
It is a huge dark pattern to ask CC during sign up. I am glad it worked out for you. Most probably because it was a B2B affair like you mentioned in the comments. But I automatically assume the people cannot be trusted if they ask for a CC. In fact this is one of my checklist when I look to sign up for a new product.
This made me wonder now. How many of them carry this thought that CC is a red flag for consumer products over to B2B settings? After all people handling B2B affairs in startups often/maybe have not handled it before. They could be bringing their consumer end thought process with them.
This is a nice read on SaaS dark patterns - https://quolum.com/blog/saas/i-analyzed-saas-billing-dark-patterns/.
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Hey Primer, I wonder how much of it is due to the markets we target?
I'm going after businesses (specifcally, B2B SaaS businesses with sales teams).
I think you're right in that, in my experience, I can't remember the last time I put a CC down for a trial of a consumer product.
I just wanted to say the same. Additionally, when I see a service asking for CC before I can access the free trial, I won't sign up. Giving out my CC to some service I might not have heard of before requires trust, and usually, that feels too risky to me. Unless it's an established brand like you said.
What would be the optimal method of validation, email signups? pre-launch customer feedback? conversation..?
This comment was deleted 2 years ago.