To free trial or discount? Tactics to gain traction for your new product

Getting your first 100 customers can feel like running uphill… against a headwind… in a storm. Every additional customer you acquire is a critical piece of momentum in the push to gain early adoption.

It is tempting to slash the cost — or make your product free altogether — to entice early adopters and garner much-needed social proof. But monetary offers should be thoughtfully approached to ensure you maintain the value positioning that’s core to your offering. 

In this article, we’ll break down the mechanics of free trials versus discounts, when to use each to get traction for a new product, and how to ensure your incentives are working for your long-term growth.

Before you decide on a tactic, you need to define your goal. Maybe it’s that you want to remove a barrier to entry for prospective users, or you’re trying to overcome a pricing objection.

While both strategies aim to acquire customers, they solve different problems in the buyer’s journey.

• Free trials are primarily a ‘try before you buy’ mechanism. They are designed to prove value and work best when the barrier is uncertainty about whether the product solves the user's problem.
• Discounts are a ‘buy now’ mechanism. In contrast, they are designed to create urgency and work best when the barrier is budget or timing.

When evaluating your launch strategy, you need to be honest about where the friction lies. If users don’t understand your product, a discount won’t help — they still won’t want it, even at half price. If users love the product but can’t justify the cost, a free trial might give them free access, but it still won’t do the job in converting them. By starting with your goal for offering a pricing incentive, you can align the right one with the right customer objection to maximize your chances of converting prospective users. 

Free trials are most common for SaaS companies or product-led growth (PLG) companies. 

Typically, free trials are best for products that deliver customers with immediate value. If a user can sign up and experience that aha moment within their free trial (ideally within a few days), a free trial is often the right choice.

Why do free trials work?

• Reduces friction: It is the easiest way to get users into the product.
• Builds trust: You are confident enough in your product to let it speak for itself.
• Data collection: Even if they don’t convert, you gather valuable usage data to improve the product.

Challenges with free trials

• Low intent: Free trials have a reputation for attracting users who have no intention of buying.
• Delayed revenue: You are servicing users for free, which increases your support costs without immediate cash flow.
• Conversion complexity: It can be challenging to convert users from a free trial — if the trial ends before they have experienced that clear “I need this” moment, they are highly likely to churn. 

If you choose this route, you’ll want to run micro-experiments to optimize your free-trial conversion rate.

• Time-box it intelligently: Don’t default to 30 days because it’s standard. If your product takes 3 days to learn, a 7-day trial might create more urgency than a month-long one.
• Consider limiting usage: Consider a freemium or usage-based trial (e.g., “free for the first 3 projects”). This ensures that users who hit the limit are the ones who get the most value — and are therefore most likely to pay.
• Require a credit card (maybe): Asking for payment info upfront can filter out low-intent users, but it creates more friction. If you need a high volume of users for testing your product, it’s often best not to require upfront payment info. However, if you want to validate true purchasing intent from trial users, ask for it.

Discounts are often overlooked by brands aiming to position themselves as premium, but they can work as startup customer-acquisition tactics when used correctly. From a founder’s perspective, a discount acknowledges that price is a friction point and aims to lower that friction for a short period.

This incentive strategy works best for sales-led B2B products or high-ticket items. They can also help startups land a larger enterprise client with a small contract before expanding the scope.

Pros of offering discounts

• Signals urgency: A limited-time offer forces a prospect to either make a decision to buy or give a definitive no. Either way, the company gets its answer, which can give insight into the customer’s perceived value. 
• Immediate cash flow: Unlike a trial, a discounted customer pays you today, which is critical for managing your cash conversion cycle.
• Validates payment intent: A customer paying $50 for a $100 product is a far more valuable customer for validation purposes than one paying $0. You should prioritize feedback from paying customers over non-paying users, and you can use discounted accounts to start gathering helpful feedback.

Why be cautious of discounts

• Devalues the product: If you discount too often, customers may never pay full price.
• Anchoring: You risk anchoring the perceived value of your service to the discounted price.
• Churn risk: Customers who buy solely because of a deal are more likely to churn when the price renews at the standard rate.

How to make it work

• Make it conditional: Don’t just give a discount; make the customer earn it. Offer a discount for an annual upfront payment. This improves your cash flow and commits the customer to the product.
• Frame it as a beta test or a founding member rate: This protects your long-term pricing power. Instead of cheapening your product's perceived value, you are rewarding early adopters for taking a risk on a new product.
• Sunset the offer: It’s important to be strict about when the discount ends to create real urgency and force action.

Free trials and discounts don't always account for products with long integration periods or high perceived risk. For founders building complex software or high-ticket services, freemium models and money-back guarantees help reduce friction without sacrificing long-term value positioning. 

These levers help you build trust with skeptical early adopters and test your product-market fit with a broader range of users.

• Freemium removes the pressure of short deadlines: A permanent free tier allows users to explore and integrate with a product that has a long “time-to-value.”  The downside is that a freemium model requires a very low marginal cost in order to scale free users in a way that supports unit economics. 
• Money-back guarantees shift user psychology toward commitment: If your product requires a significant investment or deep technical integration, a money-back guarantee shifts the risk from the buyer back to the founder, and gets the customer in the door to set the stage for a serious partnership.

Incentives are only smart if they’re intentional

The top priority for founders in the earliest stages of company building should be learning and iterating — accelerating the customer feedback loop as quickly as possible so you can build what your customers want. 

While incentives can get new customers to sign up, every incentive you offer distorts the data you need to learn to achieve product-market fit. 

When choosing your launch strategy, prioritize the tactic that tells you the most about your buyer’s psychology.

• To test whether your UX is intuitive: Run a free trial to track usage data and pinpoint where users drop off before reaching an aha moment.
• To validate your value proposition: Offer a pre-order discount to confirm customers' intent to pay before you invest further in product development.
• To overcome high-ticket skepticism: Use a money-back guarantee to reassure risk-averse B2B buyers and secure upfront payment while bearing the risk of a refund.

Ultimately, incentives are about aligning your offer with the value you deliver, so you can build a customer base that grows with you.

Choosing the type of incentive you offer is about identifying the biggest hurdle preventing your first 100 customers from converting and using the specific tool that removes it.

By being intentional about your incentives, you can validate demand, protect your value proposition, and lay the foundation for sustainable growth.