Could you imagine losing £100,000 from your business? Could you afford to do that? I know I couldn’t.
So tell me, honestly, do you run free trials? I am not talking about quick introduction calls, I am asking if you give away any of your products or services (or a small taster of your products or services) for FREE?
Come on, I admit I’ve done it! And when I market it, I put in big black capitals “FREE!” But let me share an amazing transformational moment of my life, which happened just a few days ago.
One of my long-term coaching clients called me and said, “You know what? I made £800 last month from my trial sessions alone”.
The background of this story is as follows: When she came to see me 4 years ago, she had been in business for over 5 years and was struggling financially.
One of my immediate suggestions was to charge for free trials. She basically gave me a hard ‘no’, and I wasn’t able to change her mind then because she was convinced that she couldn’t possibly ask people to pay before they had tried.
Would you believe it took me 4 years to convince her otherwise? Last month she finally decided to try it and she made £800 extra from her (no longer) free trials.
For obvious reasons I can’t disclose too much information about her business, but I can say that she has a repeat service business with an average sales value of £50 per transaction.
Last month she signed-up 16 clients who were utterly comfortable with paying the full amount for her trial session. Yes, she waited 4 years to change but she went all in and decided to charge the full amount!
I decided to tease her and asked, “Tell me, on average, how much have you lost from those free trials over the last 4 years?”
Knowing that pre-COVID she was signing up around 25 clients we decided to average the number of new clients signed-up per month to 20.
Here’s what we calculated…
- 20 new client trials x £50 per trial = £1,000 per month.
- Over the course of a year that’s £12,000.
- Multiply that by 4 years and that’s £48,000.
But that’s not all. Considering she’s now been in business 9 years, all those free trials have actually cost her around £100,000!
WTF!!!!???? Imagine all the things you could do with £100,000…
It can be ok for a new businesses to offer “Free trial” periods (although I think even £1 is better than free) especially if it is an online product, it is ok to offer free stuff as a lead magnet … but you should only do it if you get what you need in return (contact information, phone numbers) etc …
Selling for free is a model that works perfectly for subscription-based businesses but can be very harmful for solopreneurs and micro-business owners. Micro-businesses are built on quality relationships and higher transactional values, whereas subscription models are based on quantity and lower transactional values.
Therefore, selling for free can cost you in 3 ways. It can make you:
- Attract the wrong audience: people who were only interested by your free offer and not ready to pay for anything
- Lose time and money: If your business is based on monetising your skill and time, it will cost you a lot of time (thus money)
- Lose confidence: because converting freemium to premium is a real beast and not achieving that can make you doubt your offer.
So, I decided that we must commit to never selling for FREE ever again and decided to share with you how to do it:
1. Define the absolute right price for your offer.
I know this is a biggie and all companies, big and small struggle with pricing strategy. The only way to get it kind of right is twofold:
- Do your maximum to understand A) your market (what price your competitors are selling at for) and your internal financial requirements (how much you need to sell it for to make a profit)
- Unless you are leading a Ryanair strategy, aim a little higher because you can always discount.
2. When selling, give the price first and the good news after the discounted price.
Here is the difference:
- The PT session is £100. Good news, the trial session is at a 50% discount.
- This trial session is £50 … Normally it would be £100.
In the second version, the audience will not even hear £100… They registered the main information, which is what they are interested in.
In the first option, their brain registers the information twice because the price has changed.
This practice will help you own your price. It will help your audience to understand the value of your offer. And your discount will land as good news instead of an explanation.
3. This strategy is only for new and start-up businesses who need to build their tribe; thus they “might” need to give away some sort of free stuff.