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Pros and Cons of SaaS Free Trials

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedApr 20222 min read

Free trials can be a nifty way to drive sales for your SaaS (software-as-a-service) product. They offer perks for both businesses and customers, allowing users experience of using a product for free, while enticing new customers to your business.

However, although free trials can be a successful sales initiative, there are some cons involved worth considering before you launch into offering a free trial. In this article, we’ll take you through the pros and cons of offering a SaaS free trial.

What is a free trial?

Firstly, let’s define precisely what’s meant by a free trial. The term refers to the offering of a product or service to the public for free for a limited period of time (typically a month). The idea is that customers will have a good experience and decide it’s worth paying to continue using it.

Pros of a free trial

Now we’re clear on what a free trial constitutes, let’s delve into the benefits of offering one.

Attracts customers

The obvious advantage to offering a free trial is that it can be a valuable way to attract customers who may otherwise be wary of paying for your product or service. This is because many customers err on the side of caution when it comes to their subscriptions, preferring to be certain that they’ll get use out of something before committing to paying for it. If your product or service is good, then you can be certain to see high SaaS free trial conversion rates.

Other than attracting financially cautious customers, there are some additional ways free trials pull in more clients:

By showing that you are confident in the quality of your product
By instilling a sense of ownership in the user, making them less willing to part with it
By adding a sense of urgency, inciting customers to sign up
By lessening the fear of commitment as customers know they can always not pursue a subscription after the trial is up

Gather customer data

For customers, signing up for a free trial involves entering some personal information, including an email address. This allows you to stay in touch with the customer and reach out to them in the future with other products, even if they ultimately don’t decide to go transfer to a paid plan.

Additionally, you can use the data to carry out some analysis on customers that do convert vs ones that don’t. This can inform a customer conversion and target strategy going forward.

Provides feedback

Offering a free trial is also an excellent way to get feedback on your product, especially as it is your target market using it. An example of this would be getting customers to fill in a quick survey if they decide to cancel and using the responses to see how you can improve your product or service.

Cons of a free trial

Increased costs

While it may lead to higher conversion rates, there are still overhead costs involved in running a free trial — which won’t all be compensated. For this reason, if you have lower startup costs, a free trial might not be the best option for you.

High churn

Hopefully a large portion of free trial users will continue using the product on a paid basis. However, there will always be some who just want to take advantage of the free trial and then opt out before paying. This invariably increases your churn rate.

Lot of competition

Nowadays, SaaS free trials are so common that competition can be high. With most SaaS companies offering some form of free trial or freemium model, yours will really need to stand out of the crowd to lead to high conversion rates.

Benefits of GoCardless for SaaS business model

If you’re using a SaaS model that features free trials, GoCardless could be well suited to your needs, as it’s ideal for handling recurring payments. GoCardless collects payments directly from your customers’ bank accounts via Direct Debit, giving you greater control over payments and cash flow. Plus, our Success+ features automatically recovers up to 70% of failed payments without the need for any human intervention, reducing the need for additional admin, as well as awkward conversations with your clients.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.