Software Marketing Resource Articles: When Something Online is Free

You wrote the code, now how do you sell it?

Thursday, July 28, 2005

When Something Online is Free

What are consumer expectations when something is free?
Realistically, consumers subconsciously assume free means free, and while that might be the initial intent rarely is it the case.

What Exactly Does Free Mean?
Very few things these days are free in the real sense of the word. There are very few free items that do not have any strings attached.

Why do Companies Offer Things for Free?
Companies or individuals may promote a free offer or service for any number of reasons. From branding to ad revenue, companies often use "free" to attract attention or interest. As a consumer, it is important to realize what "free" might really mean.

Reasons Things Are Free:

Companies may offer something in exchange for a link back to their website. As the web becomes increasingly more competitive, linking can effect more than just search engine placement, and providing a product, service or information free of charge in exchange for a link can be a good business decision. Often, publishers will create articles like this one and make it available for syndication, with the stipulation being that the author resource box that follows the article remain intact, providing links back to the author's website. Bottom line, authors often make content available for syndication in exchange for links back to their websites, which they benefit from.

Ad Revenue
Some companies provide a product or service free of charge and generate money from advertising. Perhaps they sell banner advertising on their website. A free product draws web traffic so that the number of visitors seeing the advertisement increases. The more visitors a site attracts, typically the more revenue generated from the ad space. Perhaps a software application is free of charge, but has embedded advertisements. When ads are clicked, the software developer earns a percentage of the revenue paid for serving the advertisement.

Goodwill Branding / Public Relations
On occasion, companies will provide a product, service or information free of charge. If the offering is extremely magnanimous or socially sensitive, they will often receive significant press exposure, generating free publicity for their brand. Pepsi Cola sponsors a number of athletic events and generates enormous amounts of brand loyalty and positive PR with their target audience.

Contact Information
Sometimes companies or individuals will provide something free in exchange for contact information. Ebooks are often provided free of charge if you provide an email address. The contact information may be sold at a later time or be used to market related products. It is important to check website privacy policies to determine how personal information can be used.

Companies will often provide a light version to gain attention for fee-based products or services. This often allows potential customers to see a product's or services potential. The hope is that providing something free will generate both brand loyalty and interest in fee-based options or services.

The Problem with Free
If a business or individual is truly providing something for free, there is a cost involved. Whether time, resources or services are consumed to provide the free item or service there is an expense involved. If the cost is at any point greater than the benefit or perceived benefit of offering the free item or service, the business or individual will likely review options to better balance the cost-to-benefit ratio.

They may:

Discontinue support
Companies or individuals that provide a free product may continue to provide the item free of charge but discontinue the support. If the item is something like software, the expense has already occurred. By providing the item without technical support or customer service they can reduce their staffing costs. The only ongoing expense to provide the item free of charge would be ongoing hosting costs, which are usually relatively small. If the item is critical to a business or individual's operations, the value of the item will be lost if technical support or customer support is no longer available.

Businesses may simply discontinue offering the free item or service without notice.

Individuals or companies may begin requesting donations, compensation, volunteers or a benefit listed above in order to continue to provide the item or service free of charge.

Cut Corners
Often free items are of reduced or inferior quality. Cost-conscious businesses or individuals often try to minimize the expense associated with free items and will use less expensive materials for free items.

There is value to "free" just be sure that you know what it is. Next time something is offered for free, evaluate the quid pro quo and determine what you are giving in return, because very little is ever really free.
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