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Tips on putting together 'early adopter' / 'private beta' basic agreements?

Hi guys,

We're pulling together a select group of private beta clients to test our first product release. Its a B2B SAAS product for the hotel industry. We're giving it away completely free as incentive for early adoption, in exchange for working through issues with us and becoming reference accounts for eventual paying clients.

Looking to put a basic agreement in place to recognize the 'no charge for life' arrangement in exchange for helping be a reference account and giving us regular feedback etc.

Anybody done this before? Things to watch out for? Examples?

10 Replies

Dave Angelow
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Dave Angelow Entrepreneur • Advisor
Board Member at HAND Austin
My $.02 that any property should be wary of free if it involves their revenue stream.

You have to be a going concern to support the product. Giving for free sounds desperate and no way you'll be able to provide support if/when I need it

Happy to share more offline if you like. I worked with a few PMS/CRS in the past with mid level and high end chai s
John Duffield
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John Duffield Entrepreneur
Sr. Manager, Interactive Program Management at SapientNitro
Thanks for your comments Dave.
We're doing everything we can to get it in the hands of early adopters as soon as possible. Its not desperate, its a desire to get real-world client feedback as soon as possible and as lean as possible. After all the phone calls, meetings and demos.. its time to get the full prototype in the hands of the client. Believe me, we'll be on call 24-7 for support during private beta. This is going to work.

Please let me know if you (or anyone else) feels we're on the wrong track here after giving more insight. We're employing LEAN tactics here and we're rewarding early adopters and letting them know we have skin in the game here.
Dave Angelow
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Dave Angelow Entrepreneur • Advisor
Board Member at HAND Austin
Hi John I don't know enough about what your product does. If I was a company my concern would be how you can support me with no revenue. Lean is great yet enrollment of early adopters has to be low risk to their business. Saving money is great only if there isn't any risk to revenues - Sent from my iPhone
Simon Bain
3
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Simon Bain Entrepreneur
CEO SearchYourCloud Inc.
Hi, Can I suggest a slight change of wording. Instead of saying you are "giving it away completely free" Why not get a PO from them which states the length of term, along with what the software/service is. In the payments section have specified reference customer and Beta tester. This way a few issues are overcome: 1) They become real customers with a valued return - non monetary but worth a huge amount to an early stage company 2) It makes the license easier. You can use your standard terms and EULAs if you have them if not there are plenty around that can be modified very inexpensively 3) When you are asked if you have paying customers. The answer can come back as yes. The value paid is as references for other customers. We do exactly this and it has been really really useful. These people are customers in every sense of the word. They also feel as if they have some ownership and take pride in helping and seeing their suggestions come in to the product. Simon
John Duffield
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John Duffield Entrepreneur
Sr. Manager, Interactive Program Management at SapientNitro
Thank you David, great points.

Simon, tremendously helpful thank you. A great idea. I really do want this to be acknowledged as an official license record of this. Love the value being placed on references for other customers. Agree they are customers in every sense. Did you have an agreement drawn up by an attorney or did you put something together yourself?
Simon Bain
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Simon Bain Entrepreneur
CEO SearchYourCloud Inc.
Hi. We took a standard agreement that I had used in a past life and had it altered by an attorney to more closely fit our requirements. (SaaS model service with software license). This way we made sure we are covered without excessive cost. I would always suggest getting a license checked over by a friendly legal eye as it can save money later. If you do not have a friendly helpful attorney go find one and take them out for a coffee. It could be the best coffee you buy ;-) Mine is UK based but most of his contracts and license work is for US companies. So I was very lucky as he has been a friend and helper for many years. He also is able to work for me for coffee, sometime Hot chocolate! :-) Simon
Don Daglow
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Don Daglow Entrepreneur • Advisor
3-Time Inc. 500 CEO, Technical Emmy® Award, International Speaker, Advisor at Founders Space accelerator

Context: I very much like the philosophy of get it in the hands of the users ASAP so you can start the learn-adapt-rework-tune-retune-joy cycle.

In that context, I have comments to extend the (great) suggestions Simon made: You may want to charge these users your projected full rate, then credit back virtually all of the amount as a discount offered as an inducement to participate in early testing. Having them pay you $10 after a discount of $9,990 of a (for example) $10K fee has multiple benefits apart from the ones I think your counsel will describe:

1. It allows you to tell clients that your pricing has been consistent from the start (or was reduced from $10K annually tp $7.5K or whatever), which avoids some nasty negotiating tactics where clients can come from emotion ("i want the same deal you gave him!").

2. Telling them that their help is worth almost $10K reinforces that both the software and their time are important and valuable, as opposed to getting something for free, which means that it may be worthless. The cost is the same but the value statements and mood change dramatically.

3. It provides consistent Marketing positioning. As noted by Simon above, the license is valued at $10K so brand value is upheld, and you can also place a term on the license so the free support can last quite a while without being perpetual.

4. Give you recourse (with attorney help) if someone does not in fact take part in the testing and you want to get materials, etc. back: you can revoke the discount for non-participation and then waive the $10K they owe you in return for getting what you want and a signed continuing NDA.

Hope this helps!

Don
Rob Gropper
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Rob Gropper Entrepreneur
Director at PetHero, SPC - Member at Eastside Incubator - Principal at Tuxedo Technologies Group
John;

this may not be the feedback you asked for, but i am going to echo most of the sentiments above. enterprise customers are VERY different from consumers. to most enterprises, 'free' means little, in fact it will typically be viewed as suspicious - 'you get what you pay for". Charge if for no other reason then to increase the odds that they will perceive value and take it seriously. Focus on the value you bring to the table and charge for it. don't sell yourself short. Do take time to clearly understand their needs/wins and understand their build/buy decision criteria. this is super important so don't skimp and don't think you are ever done and don't thin that just oner person can give you all the info you need. for a primer on 'needs analysis' read "strategic selling" by Miller & Hayman (sp). to an enterprise the biggest issue is rarely price. I can assure you that the issues at the top of their list are:
1. does it help us generate revenue (revenue projects always take top priority in the C suite).
2. does it give us a competitive advantage?
3. Risk: how do we limit our downside - one way is for us to participate in the design and direction of the application. Getting it for free does nothing to limit risk.
4. Does it help us with branding/PR? is their a risk to our brand/PR?
5. Does hit help us reduce costs?
6. how much of our time/resources will this take and how do we justify this?

Look at the high valuations companies are paying to acquire companies like WhatsApp, Instagram, etc. This has nothing to do with "gee, did we get this for free or the lowest possible cost". It has everything to do with competitive advantage and others noted above.
Rob Gropper
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Rob Gropper Entrepreneur
Director at PetHero, SPC - Member at Eastside Incubator - Principal at Tuxedo Technologies Group
...and from a tactical perspective:
1. charge a full/fair price and offer a discount for services they provide to you, i.e. their beta testing, but limit this.
2. as noted above, try to keep your pricing consistent so to prevent conflicts with future customers
3. add a clause in the agreement to be sure the customer knows they should not be advertising the terms of your agreement.
4. be sure the agreement is clear about what they need to do/complete to receive the special pricing.
5. be very careful about "for ever..." language.
David Morse
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David Morse Entrepreneur
VP of Sales at Censio
(1) Charge for your product. Discount in exchange for references/testimonials. Offer X% off future purchases, payment terms or money-back guarantees as incentives if needed.

(2) Mimic the Best SaaS companies. Either find standard SaaS terms, privacy and AUP online or look at the top B2B SaaS companies that are similar to you and create your own with the help of a lawyer. I looked at Hubspot, Wistia and Mailchimp, wrote the first draft myself and asked a lawyer to review. (cost = ~$200)

(3) Put all your terms online. When terms are online, they are more often than not perceived as non-negotiable. Also make it clear that by using the product, you are agreeing to the terms.

(4) Use a 1-page order form.Put pricing, discounts and any special terms here. Use this for your first few customers if you (a) don't take credit cards online or (b) aren't set up with e-signature software yet.

Here's a link to my order form and terms:
http://goo.gl/WQqUxC



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