Is ‘free’ a viable business model?

This is a challenging question that we explore on our ‘Break From The Pack’ programme.

Chris Anderson, of Wired and ‘long tail’ fame, has released a new book called ‘Free: The Future of a Radical Price’, which is now available in bookstores I have visited recently.

Many people have engaged with this concept in the blogosphere. Frank Prendergast and I explored what the idea means for us.

And here’s a great collection of perspectives on this book, including inputs from Kevin Kelly, Seth Godin and Malcolm Gladwell, as well as an interview with Anderson himself.

What’s your take? How does this concept apply to your business?

2 thoughts on “Is ‘free’ a viable business model?

  1. Eddie Kingston

    Hi Aodan,

    Hope all is well.

    Great reading. I think the free concept really took off as a means to draw people into the product line where they can be lead up to value add products. Some folks have the service model where the product is free, but the maintenance etc generates a nicely profitable revenue stream.

    I notice a lot of application developers offering their product for free on web, but without some killer app features for which you can upgrade and pay.

    Is not free music in many cases a sampler to get folks to come and see the show?

    Wall Street journal has a good system of drawing you into paying for their content by delivering free snippets via email and other distribution channels – I think it works well for WSJ readers.(WSJ is no longer on my reading list).

    One of the biggest challenges you have now though is that free is everywhere and whereas before it was a differentiator, now it is almost a prequisite and you are back where you started – trying to find a great tool to compete.

    I agree that perceived value is everything and people may need to try before buying, they are willing to pay for perceived value ( which can be different in each market).

    Where to next? The app store at apple showed that volume sales with near free prices works very well (mostly for apple though, not for individual app developers).

    My take is that free is critical to draw new customers into your product offerings. Upselling to enhanced features is the next step and steady maintenance stream is long term goal. – not a new model – see the mobile phone operators….how to replicate with your product is the challenge.

  2. Aodan Enright

    Thanks Eddie.

    Great point about ‘free’ no longer being a differentiator. Anywhere that you have a digital product, there will be pressure to have free access.

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