A bug saved the company

Free-trial-based approach to software distribution is not the best. Compared to at least one better alternative, it is:

0) worse when it comes to developer bottom line (if you are being generous, try to provide enough trial time and usable software during trial period, a large chunk of your users will just never pay);

1) worse when it comes to user experience (you are interrupted, you encounter blocked-off functionality, which basically means that upsell is part of core GUI);

2) worse when it comes to developer experience (now you don’t just program one great product, you also have to program into your core GUI the upsell—the various ways in which it becomes restricted while remaining usable);

3) worse when it comes to product improvement (the unhappy user will simply delete the software and you’ll never know what they didn’t like);

4) exactly identical when it comes to honest paying user’s expenses.

No doubt, there are worse options. (One that takes the cake: advertise it as free software, but constantly upsell the “full version” offered on subscription basis.)

What’s that better alternative I’m comparing free trials against, then? Simply offer returns. Buy it, get a license, make your trial period however long you like; don’t like it—request a refund, get money back, get license revoked. What it means is that “tried and not bought” is no longer one of the “happy paths”. As a result, you have a better chance of really understanding what was wrong (if I must ask you for refund, you are in touch with me), and you also exhibit more confidence in your product up front.

I believe App Store in fact works this way. If someone’s thinking about distributing there and feels like the only way to offer a trial is IAP, maybe reconsider: you don’t need that overhead, one fully featured version is enough if your users can already get their money back if they don’t like it. I believe refund process happens automatically for you as a developer, though I’m not sure whether or not the feedback they provided will be forwarded to you. Willing to be corrected.

I like your line of reasoning and you may be right. But as a user I'll probably try a few of the free trial competitors to see if they do what I want before I put money down. I don't always trust front line customer service and the returns process. Sure, maybe you are the good developer who makes it instant and easy. But maybe you're not and either employ dark patterns to keep me in place or don't respond to me at all to return my money. Then I have to consider if the cc charge back process is worth my time and hassle.

Is there already an escrow style middleman?

Want a program, give the middleman some money, get the product.

Within whatever trial period, tell middleman you don't like it, they refund you, program stops working.

Post trial period, money goes to developer.

Provided middleman looks more trustworthy than developer or end user, both win. Roughly what lawyers do in the real world.

If that's not a product already, someone is going to make a killing out of creating it.

Is chargeback a hassle? I’d think it’s absolutely in the interest of the developer to be responsive to refund requests because chargeback is so trivial with a credit card.

If anything, a downside of the approach I advocated for would be if too many dissatisfied users just issue a chargeback and not even request a refund. For a developer, high rate of chargebacks can presumably cause issues for billing.

There is a big penalty for chargebacks, so not presumably, definitely.

Depends on your platform, pricing, how good your product is. Stripe charges $15 per chargeback; if your software costs $100+, it’s probably not a massive concern. If you distribute via a well-run walled garden, chances are it’s not a concern at all.

Chargebacks aren’t so scary. It’s never a default recourse for any customer, especially not the type financially able to buy your product outright (remember patio11’s advice: the higher you charge, the better educated and less problematic are your customers; and any amount is higher than zero). You don’t just issue a chargeback if you didn’t like your new iPhone; same with anything. Whoever issues chargebacks all the time, rather than going through a refund process, is in no time dropped by their bank for chargeback fraud.

As a developer, you only run the danger of accumulating chargebacks if you promise a refund and then simply ignore refund requests, in which case it’s squarely on you. Frankly, there’s no excuse not to have a fully automated refund processing pipeline.

I had the same immediate thought, but I think (as the product provider) it's quite a scary kind of friction to add. Customers already understand the standard subscription model/risk. Adding escrow means they have to learn about a new layer, evaluate it, etc. all in addition to doing the same for your own product.

Plus, never underestimate the ability of funnel customers to just flat out not understand something that seems simple to you. Deviating from norms IME leads to a big drop off. So the value of deviating has to be enough to overcome that.

As a user, if I make a choice to buy from a developer direct, I already trust that developer and their billing system (like I trust whoever made my OS—there’s no other choice). I am definitely not trusting yet another third party and their PII management practices.

Free trial is far from the norm. Where else in life does an average person get free trials? Whatever you buy, 99% of the time—be it electronics, clothing, etc.—you make the full payment up front, and if you return it you get a refund. You don’t just issue a chargeback if you didn’t like you new jacket; you don’t get a free trial on a washing machine.

Subscription model is not the norm either (and if you ask me, it’s among the worst models ever when it comes to small focused software of the kind Rogue Amoeba makes).

A major benefit (which, frankly, is a surprise to me that it’s even worth mentioning) is that refunds is the most intuitive process to handle it. Us weathered tech geeks have an intuitive grasp of the shareware business model; however, we are a minority.

I think compared to 'a new escrow platform' (which was the GGP), free trial is vastly more understood. I don't disagree that refunds are a better model, at least for my personal preferences, but most people who have used an app store understand free trials (even if they dislike them).

> most people who have used an app store understand free trials (even if they dislike them).

As far as I know, App Store doesn’t have an option for an actual free trial followed by a one-time purchase (the kind old geeks like me know back from shareware times). If you try to emulate it and make your app stop working after some time unless a payment is made, it will be rejected by the App Store. Instead, it has 1) IAP, which many developers abuse by promoting a “free version” with crippled functionality and possibly full of ads, non-stop upselling you the next subscription tier; and 2) refunds.

I think lack of trials isn’t an issue: there’s no reason an average customer should be even required to understand this concept if refunds (familiar to anyone since forever) exist. Meanwhile, abusing IAPs this way leaves a bad taste, and I don’t think in 15+ years I have purchased a single app using this model.

As a developer, you also don’t want to burden yourself by having to provide support to customers who have not paid yet and, probabilistically, in all likelihood never will pay.

A data point of one but for me (a couple years ago).

When I was offering a paid app for 2€ on the AppStore I got less than a hundred customers. A free app with a 2€ IAP resulted in a couple of thousand of purchases.

Note also that the free version of the app didn’t have ads or anything, just slightly less functionality. The IAP arguably unlocked only minor features.

My point is: users put zero value on most programs. They will almost always choose a free alternative if it provides them the bare minimum of functionality

Now, with highly professional software like Rogue Amoeba’s things might be different.

As a prospective buyer, I'm not much swayed by a promise of returns. I never know how easy it's going to be. It might be promised that it's quick and easy, then turn out to be a giant pain. There might be terms hidden in the fine print that I missed. I might have to (the horror) talk to a human, which is not what I want when buying software.

I've been buying this sort of software since it was called "shareware" and was obtained on floppies or downloaded over XMODEM from a local BBS. I made a living from it for a long time. The fact that almost nobody has done it this way should indicate it's not as good as it sounds. (The App Store may work this way in practice, but the stated terms are that you request a refund and then it might be granted, at the discretion of Apple. They also explicitly state that requests might be refused for "abuse" which is not defined, and could very well include merely getting too many refunds. It can't really be treated as a trial.)

I also wonder if it comes down to requiring users to pay after exposing them to partial functionality (15m of recording) v.s. any functionality (must pay to open from AppStore). I think your free app is actually closer to Rogue Amoeba's approach than the pay one.

> As a prospective buyer, I'm not much swayed by a promise of returns.

Aren’t you used to it in all other areas of life?

> I've been buying this sort of software since it was called "shareware" and was obtained on floppies or downloaded over XMODEM from a local BBS. I made a living from it for a long time.

Sure. At the time I was a poor student so I am familiar with the concept of shareware but never paid for it back then. However, I think this concept is not as intuitive to anyone who was not in tech space at that time.

> The fact that almost nobody has done it this way should indicate it's not as good as it sounds.

Perhaps, but this is not always how it works. Often there’s friction and inertia that blinds people to better alternatives.

> The App Store may work this way in practice, but the stated terms are that you request a refund and then it might be granted, at the discretion of Apple. They also explicitly state that requests might be refused for "abuse" which is not defined, and could very well include merely getting too many refunds.

Perhaps you’re right, but then all I can say is that painless refunds should be a thing.

Aren't I used to what in all other areas of life? Being able to try something without risk because I can always return it? Definitely not. The issues I mention apply everywhere. Physical items are even worse, because even the best return process requires me to actually go somewhere to do it.

Really? I thought it’s the norm in developed countries, that sellers choose to be good about return to avoid reputational damage and/or are forced to be so by customer protection laws.