Free Pilot, Paid Pilot, or Something in Between?

Idea in Brief

The Problem. Vendors pick a payment structure for the evaluation period as a sales tactic — whatever removes the most friction from the pitch — without checking whether that structure is something their own finance team can actually book cleanly once cash changes hands.

The Instinct That's Wrong. A nonrefundable "pilot fee," once collected, feels safe to recognize as revenue immediately. It isn't.

The Fix. Both Deloitte and KPMG say a nonrefundable evaluation fee is a liability, not revenue, until a real contract exists. Draft the payment-terms clause to match that accounting reality, not around it.

Two Structurally Different Ways to Charge for a Pilot

Published vendor terms split into two genuinely different payment postures during an evaluation — and the split tracks with how much is actually at stake in the deal.

Camp one defers billing until conversion, or waives it outright. Pinecone's MSA, Section 11.1, charges Fees "monthly in arrears," but Fees only apply "following the end of any free trial period" — there is no fee during the evaluation itself. Weights & Biases's MSA, Section 5.1, requires standard invoicing "due and payable within 30 days from the invoice date," but that clause only activates once an Order Form is executed; the trial section carries no fee terms at all. Salesforce's MSA caps its own liability during the free trial at $1,000 rather than charging the customer anything. OpenAI's Business Terms, Section 7.2, support a prepaid Service Credits model instead of a standing invoice — fees are "due upon invoice issuance, unless otherwise agreed in an Order Form."

Camp two charges a real, disclosed price for the pilot itself. C3.ai's Tom Siebel has been unusually specific in public forums about what this looks like at scale: "the generative AI pilot... would bring a production application live in about 12 weeks for a quarter million dollars... an enterprise AI application... bring it live in six months for $0.5 million" (Siebel, Needham Conference, May 2024). C3.ai's actual, signed order form with the City of Miami shows the mechanic in practice: "the fee for the Pilot, deducting C3 AI Credits, is $1... and is an irrevocable, nonrefundable commitment on the Effective Date and will be invoiced on the Effective Date," with a named third party — Google LLC — separately committing to pay "$250,000 of the Pilot Fee on behalf of Customer" (City of Miami contract). The pilot fee here is nominal to the buyer but very real in total, invoiced immediately rather than deferred.

Why the Accounting Rules Actually Come First

Before drafting either structure, the accounting treatment of the fee determines what the clause is legally allowed to promise. Deloitte's DART is explicit: "the entity should not recognize the initiation fee as revenue upon receipt even though it is nonrefundable... the initiation fee should be recognized as a liability" until the underlying performance obligation is satisfied. KPMG's IFRS 15 Handbook reaches the same conclusion from the contract-existence side: "no contract exists until the customer accepts the entity's offer to provide services after the free trial period because the customer can opt out any time during the free trial period," so services provided during that period "are generally accounted for as sales incentives." EY's ASC 606 guide adds the underlying test: a contract exists only once "the parties... have approved the contract... and are committed to perform," and "it is probable that the entity will collect substantially all of the consideration." A pilot fee that isn't drafted as a deposit against future performance is a fee your own finance team may not be able to book the way the sales contract implies.

The Exhibit: Payment Terms for the Evaluation Period

Plain-English variants of the same order-form clause, sized for a roughly $100K Order Form. All three share one clause title — Payment Terms for the Evaluation Period — so switching tiers means swapping the body text only.

Preferred: Deferred Billing, No Fee Until Conversion

No Fees will be charged to Customer for use of the Services during the Evaluation Period. If the Evaluation Period converts to a paid Subscription Term, Fees will begin accruing as of the Subscription Term start date and will be invoiced in accordance with the payment terms set out in the Subscription Term Order Form.

Use this when: the evaluation is a genuine sales cost, not a revenue line, and you want the accounting to be as clean as the sales pitch. This is the Pinecone and Weights & Biases position — no fee, no liability question, nothing to unwind if the deal doesn't convert.

Fallback: Nominal Evaluation Fee, Credited Against Future Fees

Customer will pay a one-time Evaluation Fee of $[__], due and payable upon execution of this Order Form. The Evaluation Fee is nonrefundable but will be credited in full against the first invoice issued under a Subscription Term, if any, entered into within [__] days of the end of the Evaluation Period.

Use this when: you want the customer to have real skin in the game without booking a stand-alone service fee. Structuring the fee explicitly as a credit against future Fees keeps it aligned with the Deloitte and KPMG guidance above — it's a deposit, not a sale, until conversion actually happens.

Approval-Required: Paid Pilot With Fixed Fee, Not Contingent on Conversion

Customer will pay a fixed Pilot Fee of $[__] for the Evaluation Period, due and payable upon execution of this Order Form. The Pilot Fee is earned in full upon delivery of the Evaluation Period services and is not contingent upon, refundable against, or creditable toward any subsequent Subscription Term.

Use this when: the evaluation itself requires real implementation work and you're prepared to price it as a standalone engagement, the way C3.ai's disclosed pilot pricing does. This needs deal-desk or finance sign-off before it goes on an order form — it changes the sales motion from "try it free" to "buy a fixed-scope engagement," and it shifts real revenue recognition into the evaluation period itself rather than deferring it.

The Vantage Point

Revolear sets up dozens of new Order Forms every quarter for usage-based businesses, and payment terms during the evaluation window are where we see the most disconnect between what sales promised verbally and what the order form actually says. Getting the clause to match the accounting treatment up front avoids a rev-rec conversation nobody wants to have after the fee has already been invoiced.

The Takeaway

The right payment structure for a pilot isn't the one that's easiest to sell — it's the one your finance team can book the way the clause describes it. Decide whether the evaluation is a cost, a deposit, or a paid engagement before the invoice goes out, not after.

Related in this series: this post is part of Revolear's Usage-Based Contracting series on POC order form mechanics. Read more from the series:

Does Your POC End, or Does It Just... Continue?

The Clause No Law Firm Has Written

Should Conversion Come With a Minimum Term?

Nothing to Lock, or a Reset to List?

There's No Market Standard for the PoC Order Form