Thursday, September 06, 2007

$30 for a Free Trial

Free trials offers are proliferating like lobbyists on Capitol Hill. Everyone from Netflix to AOL, and pretty much anyone else you can think of is practically falling over themselves to get you to try their service for free. To get your free trial all you have to do is ask for it... and give them your credit card number.

My story starts with a strange charge for $9.95 that I found on our AmEx a few months ago. Since I could not identify the charge, I asked my wife what it was and she told me that the charge was the subscription fee for Disney's dedicated preschool website. It turns out that Disney offered a one month free trial for use of their educational website aimed at preschoolers, and my wife took the offer and signed up our son. Of course, when she forgot to cancel the service after a month, we got hit with a $9.95 charge. Although she tells me that she has now cancelled the service, it took my wife three months to rid us of the free trial plague. The score: Disney - $29.95; Shadox - small hole in left pocket.

Being a marketing person, I can testify that companies that offer free trials to large groups of customers are working off of averages. They know that some consumers are going to be more profitable and others less profitable. As long as the average profit level they can achieve is reasonable, they are happy. In the case of free trials, companies know that a certain number of consumers will sign up for the service when the free trial ends. They also know that some consumers will procrastinate and end up paying for the service, even though they had no intention of spending a dime.

You know all those "cancel any time" offers you see on TV? Well, they work because people are lazy, and even if they have the best of intentions many consumers simply don't get around to cancelling the service.

So here is my advice to you: the best way to deal with free trials is to not sign up unless you think you are going to keep the service beyond the free trial period. It's not worth it. At the end of the day these free trials can cost you big bucks.

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