In the life of a startup sales rep, three things are certain: death, taxes (egregiously high in California), and Proof of Concepts (PoCs). No matter how buzzy your startup is, when dealing with enterprise buyers, they’ll want to test your product before staking their reputation on a product no one has ever heard of. A PoC mitigates this risk and provides an opportunity to demonstrate the value of your solution—a necessity when you’re selling a category-creating product and aren’t simply fitting into an existing line item in your buyer’s budget.
The structure of your PoC dramatically impacts your rate of success. So, what’s the optimal approach? Free PoC, paid PoC, or a contract with an opt-out clause? Having explored all these options with varying degrees of success, I’ll walk you through the pros and cons of each one.
But before we dive in, remember that none of these options will be effective unless you properly qualify the opportunity and align on the success criteria. The best approach largely depends on your company’s stage and the deal’s potential upside. For instance, if you’re at a later-stage company dealing with an average opportunity, gathering most of the MEDDPIC information probably makes sense before agreeing to a technical evaluation. Conversely, if you’re an early-stage startup working on an opportunity that could change your company’s trajectory, you should optimize for speed. In such cases, it’s usually sufficient to kick off the PoC as long as you confirm the following:
- The customer has a genuine pain that your solution can solve.
- They possess the means to pay for the solution.
- You understand who ultimately signs off on the project and where the budget is sourced.
Free PoCs
Free PoCs, the path of least resistance, offer the quickest way to start testing and realizing value. However, this approach can sometimes leave you vulnerable to exploitation. A prospect might agree to the PoC only to use it to extract valuable knowledge from your team without any real intent to purchase. Fortunately, such scenarios are less common than feared. Establishing clear, metrics-based success criteria can safeguard against this type of exploitation. When offering free PoCs, it’s crucial to target customers who fit squarely within your Ideal Customer Profile to avoid your deal stalling in the dreaded ‘no-decision’ zone after months of significant resource commitment.
Another critical consideration is confirming the buyer’s financial capability to pay for your solution. This doesn’t mean agreeing on a price before initiating the PoC—often, that’s counterproductive as the perceived value of your solution should ideally increase as the PoC progresses. Nevertheless, during the discovery process, verifying that the company has both the financial capacity and the willingness to make a purchase if the PoC meets its criteria is essential.
For pre-series C startups, especially those in competitive markets—which encompass nearly every category—offering a free PoC is generally advisable. If the prospect is within your ICP, optimizing for speed by providing a free PoC can be particularly effective.
Paid PoCs
Paid PoCs are usually a terrible idea for early-stage startups. They introduce unnecessary friction and can prolong an already lengthy sales cycle. Imagine this scenario: your champion is eager to use your tool, but you inform them they must pay to evaluate your solution. Now, they must navigate the bureaucratic swamp of budget approvals. Since this isn’t your champion’s area of expertise, you’ve just jeopardized your momentum—good luck closing the deal before the end of the quarter. Moreover, even if they got approval and paid you a hefty fee, it wouldn’t count towards your ARR. The only exception might be when custom development work is required. In such cases, charging could be justified to cover your engineering costs. You can outline the costs of the custom work and agree to charge the fee only if they decide not to proceed with an annual agreement after the PoC. This arrangement can be a powerful incentive for them to decide before the PoC concludes.
Paid PoCs are a good bet if you’re uncertain about the customer’s compatibility with your solution. They add significant friction to the start of the evaluation process, requiring the customer to demonstrate commitment before you get started.
Opt-Out Clauses
Opt-out clauses strike a balance, merging the commitment of a paid PoC with the flexibility for the customer to withdraw. This approach entails signing a regular contract with a 30-90-day opt-out period, offering customers an exit if things don’t go as planned—thereby motivating your team to deliver exceptional results. It’s almost like a paid PoC but better because it fosters a formal partnership mindset backed by a safety net for the customer. Just a heads up: don’t count these dollars as ARR until the opt-out period is up, unless you want an earful from your CFO at the next offsite. I’ve seen opt-out clauses work particularly well, especially when you’re not overselling your product, and it does exactly what you promise. There’s a reason why, back in the day, all those infomercials included a 90-day money-back guarantee. Customers generally don’t want to return things, and offering this option removes the need to overthink the decision to move forward, which can lead to a faster sales cycle. Remember, time kills all deals; if you’re a startup, you don’t have much of it.
Opt-out clauses are particularly suited to situations where your customer urgently needs your solution and must move quickly, such as when there’s a definitive compelling event. In these instances, your goal should be accelerating all processes and pushing towards rapid production deployment. Opt-out clauses can offer a strategic advantage if you are highly confident in meeting their needs. Furthermore, it should be made clear that if they choose to opt-out, they must pay a fee equivalent to the services provided until the cancellation date, ensuring financial accountability and commitment on both sides.
Conclusion
PoCs are crucial for helping prospects quickly realize the value of your solution. By carefully matching the correct type of PoC with the appropriate prospect, you can maximize close rates and use resources more efficiently.
| PoC Type | Friction Level | Risk of Exploitation | Impact on Sales Cycle |
| Free PoC | Low | Medium | Shortens |
| Paid PoC | High | Low | Lengthens |
| Opt-out Clause | Medium | Low | Neutral |
Growth Compound 