5 Reasons Why You Should Never Give PoCs for Free

You worked so hard to find the perfect company and the right employee to pitch your solution to and after hunting for weeks and several follow-up messages you finally got the scheduled appointment.

Your prospect invited other colleagues to learn about your offering and everyone nods as you go through your deck to the final questions slide. You are well prepared to deep dive into your product features, architecture, or support policy…and instead, the very first question is:

“Do you offer PoCs?”, veiling the actual question being “Do you offer PoCs for free?”.

Here is the cold shower freezing your excitement for the perfect sales pitch.

PoC — Proof of Concept — is the general term used by enterprises to test innovative solutions before committing to a large expense.

They usually ask for it when:

• They don’t trust the technology behind the solution to be mature and scalable.
• They don’t trust the benefits you promised during your sales pitch.
• They don’t trust you as a solid and robust supplier.

While I understand that no Fortune 500 company will ever commit to a solution before testing it, here are five reasons why I believe you should always charge an amount for your solution.

# Reason N1: Don’t make it too easy to say yes

Whether you are selling a SAAS product with zero configuration, or a very complex solution requiring customization work, you will always want your customer to have their skin in the game when it comes to the adoption and change management phase.

You might need to talk to the IT, or give training to users on how your product works and what benefits it brings. It is tough, from the outside, to understand who you need to talk to in order to get things done and win the initial resistance to change.

If your customer has no skin in the game and has no strong motivation to invest the necessary effort for a successful project, he will not support you and you will end up spending several days on a PoC that has no chance of converting.

The higher the investment from the customer side, the higher their priority to make it a success.

# Reason N2: A free PoC is no sign of product-market fit

If you are a founder working on an early-stage startup, the product-market fit should be your only obsession, and, if your solution is addressing the B2B — or better yet — the enterprise segment, it will be extremely hard to have users testing your product early on.

The B2E (business to enterprise) sales cycle is long, ranging from 3 to 24 months until a full production deployment. With your startup still searching for its golden egg, you want very strong proof of value before investing in this customer segment.

From the customer perspective, it’s all about the balance between value and risk: if they perceive more value than risk, they will be comfortable paying for a PoC. You may either work to increase your UVP (unique value proposition) or de-risk your venture.

Engage in negotiation conversations early on and you will gain great insights regarding the customers’ perceived value and risk of your offering!

A paid PoC is a hint that you are on the right path for product-market fit.

# Reason N3: Find the decision-maker

As mentioned in # Reason N2, enterprise sales cycles are looooong. Can you afford the risk of chasing a person down in a company for months, investing time to give a free PoC and only then finding out she has no budget? Probably not.

You always want to clearly understand early on who the decision maker is. The decision maker is your sponsor, and the decision maker will release the budget amount required to cover your expenses for the PoC and for the actual, larger, purchase later.

If you ask for money early in the process, you will immediately expose your counterpart: if she is not the decision-maker, she will need to involve several other people in countless meetings…and that is good! She is making the scouting effort on your behalf and you will be 100% sure you are talking to the right person.

If she IS the decision-maker, great! You will get a quick no or — hopefully — a quick yes, both valuable when time and resources are limited.

# Reason N4: Engage with the Procurement office asap

In my view, the goal of a PoC is not only to have your customers try out your product: it must be much broader. You want to set all the bases to streamline and simplify the wider adoption down the line, including all the paperwork required from the Procurement office.

The requirements from the Procurement office are often overlooked by founders and can be a major roadblock in your path to success. If you offer your PoC for free, you will have no visibility on the necessary requirements to be approved as an official supplier.

The supplier registration process is painful for both founders and customers and, if faced early only, it is a sign of strong commitment from your customer (see # Reason N1) and it will lower the resistance by a lot for future implementations.

It won’t be sweet most of the time but trust me, but trust me, it is worth it!

# Reason N5: Value must be rewarded

Are you confident in the value you will bring to your customers? If so, don’t be afraid to show this confidence (be careful not to cross the over-confidence line!) by charging for your proof-of-concept project.

A free project may be perceived as low value, or not yet mature for a full-scale implementation, and you will have to work extra hard to avoid such perceptions from sticking in your customers’ minds. You never get a second chance to make a first impression.

If you are still unsure of the value contribution of your product, or its enterprise readiness, you would be better off starting from lower-tier customers and working your way up the chain until you feel 100% confident in your capabilities.

No matter how much pressure you have from investors, bank balance, or teammates: one should always pay in exchange for valuable products or services.

The only exception

IF AND ONLY IF you are selling a true SAAS requiring zero effort on your side to get your customer up and running THEN you might consider giving a money-back-guarantee policy for the first 30 days.

This way, you will lower the entrance barrier to test your solution without giving it away for free, and, more importantly, you will engage in negotiation conversations and supplier registration paperwork early in the process.

In my experience, especially for small projects, it’s never about the money. A dear mentor of mine once told me:

“Whether you are selling a $ 20K project or a $ 200K project, your effort will stay the same”.

I find it to be true.

Conclusion

I truly hope this article might help you! Feel free to reach out if you have any questions: I would be happy to exchange opinions on the matter. This is my first blog post and while writing, I realized how much I would like to share: sharing feels good!

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This article first appeared on the Medium blog at this link.