From Wikipedia -
"Freebie marketing, also known as the razor and blades business model, is the concept of either giving away a salable item for nothing or charging an extremely low price to generate a continual market for another, generally disposable, item. The concept was pioneered by King C. Gillette, inventor of the disposable safety razor and founder of Gillette Safety Razor Company (today known as Global Gillette, a division of Procter and Gamble). It is a similar concept to loss leader marketing."
I think I'm in this situation. My software is a $20-$50 month SAAS, but requires a $250 hardware and equipment investment to even get started. I am getting feedback that the initial investment is putting people off from making the jump. (I am targetting very small and independent businesses.)
What are your thoughts on my company subsidizing the initial investment in order to secure the future SAAS revenue?
Having paid something for the hardware and implemented my software, they would be relatively likely to stick around. I can easily fund the discount, especially if most people stay with me and pay it back over 2 or 3 months.
However, I'm not sure if this is a sign of weakness and that I'm maybe trying to build something that is unviable for my target market. After all - even the worst salesman can buy 'stuff' and sell it for an instant loss!
Do you have any opinions, comments, or other examples on how best to manage this?