[mason55]

> Also, liking a product/idea is not the same as being willing (or able) to pay for it.

A great thing to do is when you're validating products you ask the prospect how much they'll pay. Then say "Ok, so if I put a contract in front of you that says you'll pay $x if I deliver this product you will sign it?"

You'll find out very quickly whether someone is just being nice or whether they are serious.

[wpietri]

Indeed, rather than just asking if they'll sign a contract, you can pull out a Letter of Intent [1] and ask them to actually sign it. You can explain that they're not legally binding if you need to keep people from freaking out. But there's something about signing an official-looking document that a) makes people take it seriously, and b) makes people more likely to really sign up when you come back to them.

Depending on context, you can also ask for a credit card number and then not charge it. People are very careful about giving out credit card info, so them giving it to you is a great sign that they're really serious.

[1] http://en.wikipedia.org/wiki/Letter_of_intent

[RogerL]

Please, no.

As soon as someone starts trying to maneuver me to take money out of my wallet, I'm gone. It's not my problem that you don't know if your product is good or not. There is no way on earth I'm signing anything, giving you a credit card number, or what have you. I'm utterly shocked that this is considered a good way to gauge interest in a product.

Even if I really am interested, so what? I have a budget, my appetite exceeds my grasp, just because your product might solve a pain point doesn't mean I will buy it. I need to consider the needs of my entire business, weigh pros and cons, and so on. If you are pulling out papers to sign after a conversation, I'm so gone.

I'm reminded of some 3rd party home alarm installers that came around to my house a few months ago. We were thinking of re-activating the alarm in the house, so we talked to them. Didn't take long for the papers to come out, etc., and it didn't take much longer for us to tell them to pound sand.

I don't give emails out (because on average the spamming becomes relentless) to landing pages, now I'm supposed to give you a CC number just so you can do marketing research?

No.

[wpietri]

Your reaction is normal for a late-majority adopter [1]. But early-stage startups are looking for the innovators and the earliest of the early adopters. When those people get to the point of saying, "OMG, I want it!" they will indeed sign contracts or pull out a credit card.

The point of asking people for money is exactly to separate the people who really are early adopters from those who are just enthusiastic.

A great example is Kickstarter. You may be unwilling to buy a product based on little more than a dream, but plenty of people are willing to take a gamble on something risky when they care enough about it. The rest of us wait until the product has come out, has been reviewed, and have friends using it.

[1] http://en.wikipedia.org/wiki/Diffusions_of_innovations

[philbarr]

So in which situations would you buy something?

Not trying to be snarky or anything, I know yours is a common opinion so I'm just wondering what would be a less offensive way to test the waters?

Perhaps - do the conversation, leave some contact details, give them the papers but just say, "look, no pressure, I'll leave this with you and let you think about it." Then see how many people get back to you?

[silverbax88]

Coin. (onlycoin.com)

They showed a video of what the card would do and how it would work. I actually have no idea if it will work, or does work, but it looks like it works in the video. It looks like they have something awesome. And it won't be $2000 to buy one.

They said, it should be ready within a year and you can reserve one now for 50% of the sale price (regular price $100).

So I bought one, even though I am aware that the product might never come to fruition and that my $50 might disappear. A lot of other people bought, too. I have gotten updates and I have no reason to believe I won't get my product and I'm excited that I got in on it.

But...

What did I buy, really?

I saw a guy on a video using Coin, showing how it would work, selecting different options on his card, answering all my potential questions. Man, it sure looks sweet and I can't wait to have one...

except...

did Coin really exist or did they just do a video to show how it could exist? Does it matter? I have pretty good video equipment and coding skills...and I've even hired actors for videos and done pretty well...what would stop me from hiring an actor, shooting a commercial for something like Coin, and then collecting thousands of dollars to fund the actual creation of the product?

Nothing. I just didn't think of it and didn't act on it, and they did. I'm not saying that's what they did at all, I'm just saying that could be done.

That's market validation. They sold thousands of Coin based on their idea. I have no idea if they even had working code or product, or if they were just validating whether it would sell.

[Estragon]

Maybe not such a good suggestion for a consumer-oriented product, but I've heard that this approach works well for B2B.

[pitt1980]

that's fine,

but that's evidence that you're probably not a profitable customer to chase (which again, is fine)

if you're not taking out your wallet, you're a waste of the salesmans time, the earlier they can figure this out the better

[j45]

LOI's are generally more interesting to investors. As someone who is bootstrapping or working with limited time or money, there's no better validator than money.

[wpietri]

Sure. Money's definitely best. But if you don't actually have a product, asking for money can be tricky. The LOI's not as good as cash, but my point is that it's way better than, "Sure, I'd pay for that!"

[gchokov]

It's one thing to say how much you will pay, and different to pull out your wallet and actually pay.

[enraged_camel]

Yes, but asking someone how much they would pay for it takes them almost all the way, mentally, to actually paying for it. You're basically asking them to make a verbal and very informal commitment, but that's enough to make most people think about it seriously (as opposed to saying "omg I love it!!!" just to be nice).

[wpietri]

That's not my experience; I now avoid asking hypotheticals because the results for me have been very unreliable.

I'm certainly unreliable that way. There are a number of Kickstarters where I've said, "OMG I'd pay for that!" But if I come back to it a couple of days later, I'll never actually click on the signup button. I'm even worse with things like this in person. I don't like disappointing people, so I'll try hard to find the most positive thing to say about their product.

When interviewing, I might ask people a question like, "What's a fair price for X?" But that for me would be more about the follow-up question: "How did you pick that number?" An insight into what they see as equivalent products, related value propositions, or personal value metrics would definitely help me think about pricing.

[tchock23]

Very good points here. The prevailing advice for entrepreneurs from folks like Steve Blank is that you must "get out of the building" and be physically in front of customers to interview them, but in my experience 95% of customers would never tell an entrepreneur their product/idea sucks right to their face.

As for pricing, I've found that asking people "What do you think a fair and reasonable price for X would be?," followed by the follow-up as to why, is the best way to ask about pricing (in a qualitative setting, at least).

[wpietri]

Thanks!

I think Blank is entirely right. But you have to be tricky.

At my last company we did user test every Tuesday afternoon. When seeking subjects, we looked like a research firm, not a product company. When they arrived, there was no company name on the door. The interviewer would start out asking about a variety of products to get a baseline; ours would just be one of several discussed. Eventually, because we spent more time on our stuff, maybe half the people figured out that one product was ours, but by then we generally had enough honest opinion.

[enraged_camel]

>>That's not my experience; I now avoid asking hypotheticals because the results for me have been very unreliable.

The point in this context is that, while it may still be unreliable, it would be more reliable than simply asking if they like your product. And it is the best you can do, since no one is going to actually pay for a product that doesn't exist yet.

[wpietri]

People pay for products that don't exist all the time. That's what contract software development is all about, for example. Ditto vaporware, Kickstarter, and "coming soon" features of existing products.

And, as mentioned elsewhere, people can think they are about to pay for a nonexistent product. Once you have proven willingness, there are a variety of ways you can finesse the issue of not actually having a product.

[mason55]

That's why you ask the second question. "Ok, great, so then let's draw up a contract with that pricing and you'll sign it?"

Make them put their money where their mouth is.