Free pilots are a sham, and are less likely to be approved than if you make them pay.
It seems counterintuitive, doesn't it. Working with government is all about de-risking your product as much as possible, and it doesn't get any less risky than free. If everything blows up on day one, it's fine. They spent nothing, and they walk away exactly where they started in the worst case.
So if you can swing it, why not do your proof-of-concept for free? It should theoretically increase your odds of getting a yes, you need the credibility and data more than the money, and no payment means less hassle.
It comes down to two things.
1) People perceive the value of something based on what they paid to get it
If you give a city your product for free, they will treat it like it's free. You might say your goal is data, feedback, and credibility, but they have no real incentive to engage with it. They didn't give anything up to get access, so there's no pressure to explore it, stress test it, or actually integrate it into how they work.
The flip side of them losing nothing if it fails is that they also lose nothing if they don't try. That lack of pressure kills usage. And low usage means bad field data, weak feedback, and no real understanding of where your product actually provides value.
2) Free doesn't make things faster
Onboarding a product for a municipal pilot, free or not, is the same 6 months of procurement. You still need to be ADA compliant, pass cybersecurity reviews, get through legal, and align with internal processes. None of that changes just because you're not charging.
Mix in the lack of incentive mentioned earlier, and not only are you going to be sitting around for 6 months, but you're going to be taking a back seat to every paid project that comes along after you. That 6 months becomes your best case.
Free pilots sound great in concept, but in practice they waste both your time and theirs.
Now importantly, that doesn't mean you need to charge full industry rates. But you need to charge something. Even a small financial commitment changes how the project is thought about internally, and that changes everything about the outcome, both for you and them.