Taking care of beta testers

I might have some food for thought. Maybe not a solution exactly, but at least something to think about:

"Other tests showed that work done as a “favor” produced much better results. For example, some lawyers were asked by AARP to provide needy retirees with services at a cost of about $30. The lawyers did not accept the offer. However, when asked to offer services at no cost, they agreed. Experiments also showed that offering a small gift would not offend anybody (the gift falls into social norms), but mentioning the monetary value of the gifts invokes market norms." - Dan Ariely's stuff out of Predictably Irrational

You might be right about the person feeling they weren't adequately appreciated but that might be because you brought up money, and discounts. If you had just sent them a tshirt with your logo on it and a hand written note as a gift, you might have fared better. But it might be too late since you brought up the "taking care of them" in the original approach.

Not entirely sure if this could help. But the book and Dan (he's got some great free content out there might give you some more inspiring thoughts. And you might want to consider what gifts instead of discounts or things with monetary value easily assigned to them.

Give them the service for free, forever. They will be your best advertisement and it's a "negligible cost" to support them. This seems like a niche business where relationships and your reputation seem like the only way to succeed. Chalk it up to marking and promotion costs and move on.

Why don't you name them as a partner and "MVP" or other such recognition outside of the money? Certainly if you are discounting it by 75%, going to 99% or 100% is just fine as well.

I think you have some relationship repairing to do here. Each side is having a tough time understanding the other and you need to come to an understanding, whatever that is.

Maybe add them to your blog or give them another kind of outlet on your site so they get recognition.

They provided a huge, valuable service and you can probably recognize that and satisfy the non-monetary issue for them.

This is of course a good lesson for setting expectations up front. Frankly, I am not sure why you are confused about their reaction. You left the door WIDE open on that one and this is your fault entirely. (in my opinion)

How about giving them 2 months free for every month they used it as a beta tester?

Ironically, this is giving them less but it may seem like more because you've set a Reference Price in terms of "time spent as a beta tester".

You could also point out to them that you're going to have an ongoing cost (however slight) to provide this service (server time, etc.)

Interesting concept of an external hardware device (data bridge), connected to a PC, that uses a website instead of a desktop application.

If they paid for the data bridge, they may feel the software should be included or at least a separate/one time fee. But you have a website, with services involved (hosting, backups, external accessibility) that they would not have (and may not want) with a desktop app.

Not sure what made them think they would never have to pay for the web service. If this person continues to promote your site, it may be in your best interest not to charge them.

Wise customers don't want you to lose money because then you will go out of business and they will have to replace the product.

You should try anything else but lowering the price. Restaurant vouchers? golf umbrellas? amazon gift cards? set of coffee mugs with your logo? nice company shirts (never t-shirts) ? Get creative and the customers will like the thought you put into it.

It may be a good idea to remember that you've said the person has been a "great evangelist". That can work both ways. I'd weigh the threat of having him turn on you vs stepping outside of what could just be a philosophical stand on your product having value. On the other hand however it will become irritating to you if the person pays nothing but comes to rely heavily on your for support.

I think it's good karma to reward early adopters of your software but as you correctly point out you are a real company and they are a customer. They need to realize that you are doing this for a living and that your time and services cost money.

You did set yourself up with an ambiguous promise. Did you ask them what they think would be fair? Is it really unlimited free lifetime use of the software? Sometimes getting a customer to name reasonable terms can work out better than coming back to them with discount offers.

I don't know what your costs are in terms of hosting and support. Bottom line is if that number is very low or negligible then by all means give it to them for free -- it's not worth arguing about. Perhaps they can do additional testing of early releases, provide testimonials, etc. Otherwise, rather than a "discount" perhaps you can offer them the product "at cost." This means they just pay for your support and hosting costs for as long as they are in business and want to continue using your services.

In addition to Nathan Kontny's spot-on answer about the psychology of the situation...

If the discount was offered to the beta tester as an individual, he may not be permitted to accept it.

Many organizations have rules about business gifts to employees. Some allow nominal gifts, with a maximum value of something like $25 per year, and others don't allow anything - not even letting a supplier give an employee a can of soda.

A 75% discount on the lowest level of Ryan's service would be worth $441 per year. That would violate every corporate business gift rule I've ever heard of except for Wall Street.