Lean startups - iterations

Give serious consideration to a hybrid sales/subscription model. Depending on your development cycle, include X months (1-12) of free software maintenance (upgrades) with each license purchase. Offer optional annual enrollment in software maintenance as well. Once the product matures, you can shorten the free period (we offer 1 month) while continuing to charge for the annual maintenance.

Here's why:

1. It clearly sets expectations (I get upgrades for free for x amount of time.)

2. It encourages feedback in the early iterations (I get free upgrades, so I'm happy to tell you what I need the product to do).

3. It sends a positive message (we continually improve our product.)

4. An annual maintenance enrollment option provides long term customer relationships (We have customers who continue to stay in touch after doing this over a decade.)

5. Annual maintenance enrollment provides a substantial and continuous revenue stream (a few enrollments each month early on can easily become thousands of annual renewals over a few years.)

Peter - I am a little puzzled by your question. It reads as if you feel customers on the current/old version are something to put up with - surely the reverse is true? Firstly, if you're genuinely in a lean startup, you're going to be desperate for any product feedback you can get, and as these guys know your current product, they're perfectly positioned to help inform you if you're moving in the right direction. I would argue you should be nurturing those sort of customer relationships - after all, it's generally much easier to sell to existing customers than it is to find new ones.

In terms of upgrade policy, I can't add much to the earlier answers, except to say it's a good idea to have one, and to let people know up front what they can expect for free. Onviously the cashflow needs of the business are important, but I would err towards removing every possible hurdle in the way of customers upgrading, especially in your early stages of product development.

Hope this helps.

I'm no lean startups expert, so I could be way off here...but I believe the decision is yours to make (i.e. there's no hard rule).

The best approach may depend on your pricing model and what type of product you're selling. Will you be charging a one time fee? Will you be selling licenses? How much time are you planning between upgrades?

I wouldn't suggest the "do we just not worry about them??" approach. Doesn't seem to me like a good way to get repeat customers.

If your iterations will be spaced close together, I would suggest looking into giving away the next upgrade for free. That may encourage potential buyers to buy your product now versus waiting a year. Getting money in the door right away is always a good thing :-)

Depending on your market and product, you may have an opportunity here to come up with a novel approach that will help you stand out from your competitors. Maybe you can ask your clients for feedback on the version they purchased and in return for good feedback, they will get the next release for free. This isn't exactly a novel idea, but you get the point.

I think, as Zuly says, it is up to you and how you want to appear to your customers and prospects.

An iteration could result in a point, minor, or major release.

Assuming your product is one that the user downloads and installs then common practise is to provide point and minor releases for free and offer free upgrades on major releases if the product was purchased in the previous x months.

Your customers will probably expect you to do something similar, if you do less, you are delivering below expectations, if you do more then you will be exceeding their expectations.

Different rules apply to consulting-ware, SaaS, and to an extent smart client applications.