Ask HN: To Ask for CC on Signup or Not?

5 points by tronathan 14 years ago | 7 comments

The prevailing idea about converting customers on freemium websites is to require a credit card signup right off the bat, at signup time, to validate that users are indeed willing to pay for your product, and to increase conversions.

This method was used by Basecamp for a long time, requiring credit card on signup, but in the new version of Basecamp, a credit card is no longer required.

In StartupsForTheRestOfUs Podcast, the author/developer/owner-preneur of HitTail.com said he's asking for CC's right away and in the episode I listed to, he said that he hadn't reached the 30-day post signup time to see if those people converted, but he seems to be a fan of requiring CC on signup.

I'm building out the payment screens for my app and I'm left wondering, will I get better conversions by requiring a CC right away or is the NEW best method to NOT require a credit card right away?

Your feedback is appreciated.

paulsutter 14 years ago |

When in doubt, A/B test. Be sure to track the whole funnel, not just the initial signup rate.

My guesses:

- asking for a CC up front might make sense if the trial customers are burdensome and you want to focus your efforts on customers more likely to pay.

- if you are an unknown entity, or the pain level of your customers is low, the CC prompt may dramatically reduce signups.

But forget my guesses. When in doubt, just try it out.

jefe78 14 years ago |

Please understand this is just my opinion. I don't speak for anyone else nor am I necessarily an accurate representation of anything. This is my anecdote:

I have NEVER signed up for a new service that required a credit card up front. I HAVE signed up for free accounts, saw the value and then converted.

This is a little different for certain brands, i.e., AWS and such. However, for an unknown brand to want my CC info? Not a chance.

jeffreyshaw 14 years ago |

It really depends on how many comparable alternatives exist in the marketplace. Its no doubt that requiring CC's upfront will lead to recurring customers; but how many potential customers are you turning away? I would say for most startups you're not just concerned with revenue, but also adoption. You want your site to be used and talked about amongst social networks in person and online. This is greatly diminished when a customer bails from your site to a competitor before signing up. My advice is that if you are offering a good service that is so good that customers will be unable to find a comparable alternative; offer your signup for free and hook them with your kick-ass product. You're just going to irritate people when you start charging their credit cards and they aren't a huge fan of your business afterall. The only extra revenue you get by requiring CC for signup are tricking people into paying for a service they otherwise later decide they wouldn't pay for. This will only lead to a negative brand image, credit card chargebacks, and diminished market who has tried your product.

handthatfeeds 14 years ago |

Unless I'm buying something I won't be giving up my payment information. Maybe not all users are as worrisome as me though.

Things that I sometimes give payment info for (but they do not charge right away) is when something is a free trial that converts into a paid subscription after X time.

Otherwise for freemium I'll give my payment info at the time of purchase but for the free part, heck no.

You also have to take into consideration that giving away your credit card info feels like you are making a purchase so even though that may mean the people are more willing to purchase when they do give info it doesn't necessarily mean it is a good idea to require it.

jetti 14 years ago | |

>Maybe not all users are as worrisome as me though.

For me it isn't really a worry, there are just very few products that I'm willing to go through the hassle of pulling out my credit card and typing in those magic numbers. Is it laziness? Yes. I prefer refer to it as I value my time more than anything in the world as it is the one thing I cannot replace (yet).

rubeng 14 years ago |

I've tried both ways and saw an immediate increase in paid conversions when asking for cc info upfront (8x increase). I've talked to several founders that have tried both ways and all but one saw a significant increase as well. The number of trial accounts is lower of course.

Another benefit is that you can add a required textbox to ask for cancellation feedback when someone cancels. The feedback you get is awesome.

That said, you may get different results so it's worth testing. For something this important you'll want to let the data help you decide instead of relying on what others are doing.

tronathan 14 years ago |

This is great feedback. The magic about eight times increase in credit card capture is pretty huge. In my case, the application is very simple, and I think people need to use it before deciding to pay.

So I'm really thinking about going to a graduated payment/engagement solution. Doing up cells in the application might be the way to go for something with such a low price. In my case, I'm looking at charging $24 per year.

If anyone wants to check it out, visit http://last5.co