Google may still be offering its employees a free lunch, but for many companies free isn’t the way to make money. Blogger Allen Stern writes this morning that “most startups give away so much for free that users have no reason to upgrade.” Many people on the Internet have begun to feel entitled to free stuff: free music, free movies, free software, free information, etc. But free is potentially taking us down a dangerous path.
Michael Galpert, one of the founder of online image editing tool suite Aviary, has a great post up on the company’s blog today about getting people to pay in a world dominated by free. Galpert lays out a list of 5 things he thinks that people are still willing to pay for. These concepts can be applied to almost any product or service:
- Convenience – People are lazy, says Galpert, which is why they’ll still pay for music tracks on iTunes, rather than get it from a P2P network. If you can offer them convenience over free alternatives, they’ll pay for it.
- Quality – Access to higher quality content, products, support, or community features is something that people are willing to pay for. If a subscription fee keeps spammers out of a forum and makes it more attractive to industry professionals, then people will be willing to pony up the dough, for example.
- Additional Functionality – Galpert cites 37signals, who have pioneered the “freemium” model on the web by giving away a free appetizer, but charging for the full meal. The danger, as Allen Stern points out, is knowing how much to give out so that your pay product is still an attractive upgrade for enough users.
- Customization – Customization is a great value-added feature for many products, and people are willing to pay for it. Galpert uses WordPress.com as an example. The site offers free blogs for anyone, but to customize the CSS or use your own domain name you have to fork over some cash.
- Privacy – While privacy should be built into any service at any pay level, additional layers of privacy are something that people will pay for. Galpert talks about GoDaddy, which offers a premium service that allows people to mask their information on WHOIS searches.
Galpert’s list is helpful for anyone offering a web product or service that has to compete with free offerings. Competing with free is difficult, but as the example above show, it is not impossible.
What would you pay for? We’re interested to know. Give us your thoughts in the comments.
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