I don’t know about you guys, but I feel the business landscape changing. With talk of a rebounding economy, companies are looking for ways to jump start business. People are looking for ways to stand out in a crowd. 2009 is so “last year” – it’s about the future.
As such, one of the things I see businesses evaluating is their pricing structure. How much to charge for their product or service. Whether or not certain products and services should be offered for free.
Not long ago, The New York Times announced that they will start charging for access to their online content (starting in 2011). Users will have a certain amount of access to free content and after that limit is exceeded, they will be charged.
This is not a unique concept. Pandora Radio did something similar last year by giving listeners “free” internet radio. And, once you exceed 40 hours of listening… you’re charged a small fee ($1).
People have been debating for years the value of giving away products and services for “free”. A few months ago, Seth Godin wrote a post about the strategy of free versus fee. It’s a really good read (but, isn’t everything by Seth?) and speaks to what we’re currently experiencing in this world of instant access to news and information. You can check it out here.
As I see it, there are two angles to using free as a strategy:
- You can give something away for free because people won’t pay for it. Either because there’s so much competition keeping the price ridiculously low or because people view it as an entitlement – that should be free anyway. It will be interesting to watch the NYTimes scenario. Is “the news” as we know it considered information worth paying for? Or is news an entitlement that people feel should be free?
- You can give something away in the hopes people will like it and pay for the other things you offer. IMHO, if you use this strategy, then your free offering better be decent and provide some value. In addition, the service/product you want people to pay for has to be unique and awesome. I can’t imagine anyone buying something that doesn’t meet their needs just because they get a mediocre product/service for free.
Offering things for free can definitely be a sound strategy. If the things you are offering are valuable. And, you have a clear understanding of why you’re offering it for free.