Make More Money by Giving Things Away for Free?

Two things happened recently that got me thinking about how I sell my web design services. The first is the “sale” of an eBook for $0.00. The second is Louis C.K.'s spectacularly successful sale of his comedy special.

The author of the eBook, Johnny B. Truant (Google that for details) made a compelling case as to why he expects to eventually make more money by giving away his eBook for free. To clarify, it’s free for the first 5 days, then there will be a small charge. He admits that he’s probably losing revenue from the first 1,000 or so people who otherwise would have paid for it. His premise boils down to two things: lack of friction and popularity. By giving something away for free, there’s no “friction” to buy. After all, what do you have to lose? And by offering his eBook as a “gift”, more people may be likely to grab it, let their friends know about it, and have the popularity skyrocket (at which point even more people may be willing to spend real money for it).

Louis C.K. (for those of you who don’t know) did something remarkable for a big-name entertainer. Instead of doing the traditional comedy special, where a huge entertainment conglomerate pays him a one-time fee but retains creative control, syndication rights, and other future revenue, Louis said, “Screw that!” He sold tickets to a show for a few nights, hired his own audio/video crew, taped the show, edited it himself, and then (ready?) sold it online for a mere $5 instead of the typical $10-25 the conglomerate would have charged. Louis’ costs were about $250,000 which were covered by ticket sales. In a matter of days, he earned almost $2 Million, $5 at a time. He paid his staff a large bonus, kept a small percentage (I think it was about $200-300K) for himself, and gave the rest away to several charities.

The lesson I’m getting from these two events is that sometimes you can earn more by giving things away for free or selling them really inexpensively. So now, I wonder, is there a way I could do something similar with my teeny tiny one-persom web design company?

I’ve been a professional web designer for about 15 years and am pretty good at it. My clients are usually SMBs who don’t have large budgets for web work. I make time estimates for each project, then propose a fixed project fee. If I do some math involving the fee and the actual time spent, I’m earning the equivalent of about $40-80 per hour. But I’m in a tough spot there: The bigger “boutique” firms charge the equivalent of $150-300 an hour, and the off-shore, college student, and/or less-than-experienced Craigslist/oDesk type designers charge much less than I do. So it’s hard to compete because clients who can afford a lot want to go with the bigger agencies to get a more full-service approach, and the clients who can’t afford much at all go in the other direction.

I’m trying to figure out (and would love to hear your thoughts) if I could somehow offer something for free (or very cheap) that would entice the “big spenders” and even middle-of-the-roaders to sign on with me. I’m confident I can do good work and provide excellent customer service, but those are the kind of things that aren’t believable by a client until he experiences them. Would it make sense to do something like these ideas?

> “Free 3-Page Web Site!” (I’d do some basic, template-based work, then try to upsell additional pages and/or custom design work)

> “Free Web Site” (I’d offer a one-page, business card-type site, then later pitch something like, “Hey, your one-pager is getting lots of traffic, but your visitors want to know more about you.” and offer to build out the site.

> “5 Page Web Site for Just $89” (I’d do a quick, template-based site, maybe contingent upon signing a 1-year web-hosting contract with me, on which I could earn a little extra income.)

What do you guys think? Do you have any ideas along the lines of the eBook author and the comedian? How can we web designers climb outside the box and offer something our prospects can’t pass by?

Would really love to hear your thoughts!..

The lesson I’m getting from these two events is that sometimes you can earn more by giving things away for free or selling them really inexpensively.

The low cost wasn’t why the video was so successful. Louis CK is someone who has deeply connected with his fans - he’s spent many years talking to them on forums and after shows, asking their opinions on future material, on how his products should be offered etc. He’s known for being humble and honest, and ultimately giving his fans great reasons to buy his stuff - they adore this material, they adore him, his video was priced sensibly, personally financed and produced by him rather than a big faceless corporation, DRM free etc. It’s not really about the video being ‘cheap’ - there’s much more going on there that made it such a success.

I don’t believe any of your ideas really go anywhere near what Louis CK was doing there. I think if you want to be fully inspired by Louis CK, you need to look into ways in which you can deeply connect with your potential customers. However, I’m not entirely convinced a web developer can really do this - it’s much easier for musicians, actors and authors as they tend to have ‘fans’, not ‘customers’, and there’s typically quite a bond. While you can certainly form more than a faceless corporate connection with your clients, they’ll never become ‘fans’, and I doubt they’ll ever put a poster of you up on their wall :slight_smile:

As for giving away free/heavily discounted web sites, I’m not sure how the ‘big spenders’ you seek are going to be in any way interested. By their very nature, they are looking to ‘spend’ and spend ‘big’. They’ll know that for free, they’ll just be getting some generic template that is unlikely to satisfy any of their requirements - ultimately, you’re not offering a ‘feature’ that there are interested in. Offering stuff for free is IMO only going to attract the type of clients I believe you are wishing to avoid.

Don’t get me wrong, I am very interested in the various ‘free/free-ish’ business models (particularly the ‘pay what you want’ ones), but these models tend to work better in situations where creative individuals are doing a lot to connect deeply with their fans. So for example, Radiohead offer their album on ‘pay what you want’ - the real fans will choose to pay a decent price because of the bond they have with the band, especially when they know all the money goes to the band and not a bunch of middle men.

I’m just not convinced web development is a suitable industry for these types of models.

I agree, there is a big difference between giving away free stuff in order to build a personal brand that you can monetize later, and giving away services for free. The way to increase your rates as a web developer is simply to improve your offering, your quality, and differentiate yourself through your skill/ability. Giving away free web design doesn’t do this.

One way to improve your rates is to position yourself as an expert in your field, though, so giving away advice/information/books/tips, etc. is a proven technique. Not the actual services, though.

Yes, at least part of Louis’ success came from the fact that he has an established fan base (unlike me!). A less-known artist might have had a harder time. Agree with you on the difference between artists and web designers. Also appreciate your insight about big spenders wanting to spend big and not likely to be attracted to “free”. Thanks for the good feedback!

@Sagewing It’s not just about increasing my rates. In fact, at least for now, I’d rather keep my rates the same but increase my client base. Totally agree on the “establish yourself as an expert” thing - I’ve been hearing that for years, so maybe now I’ll get off my butt and actually do it! And that does open up a bunch of opportunities to give stuff away for free that could lead to paid work.

Many of the small, low budget clients don’t like to see the big numbers. If you break it up, it becomes more palatable. Instead of, say, $500 for a site, make it $99 setup plus $49 per month for the first year, including hosting and basic maintenance.

I don’t consider the low-cost overseas developers and students to be my competition – they tend to “disappear” before the project is complete or when there are issues that need to be addressed, leaving the client in the lurch. If a client is happy with the quality of their work, then they are not for me. Many of my clients had come to me after being burned by inexperienced and/or overseas developers.

Giving away work rarely correlates back to any increase in paid work but it does result in more requests for free – even though they didn’t pay people expect help just the same.

Instead focus on “giving” away expertise. Whether you blog, tweet, write a book or whatever other format you find of value, sharing your expertise and ideas allows you to get seen as a knowledgeable source, the type of company someone would gladly turn too for their next project.

What Louis C.K. did was clearly disruptive to the entertainment space – not because he was the first, he wasn’t – and not because he was the cheapest – others [including some major bands] have opened things up to entirely “self set” pricing – but because of his size and willingness to share results. He had the audience to get a response and showed the numbers to get others to see what happened… which helped to grow it more. Furthermore there was no fluff, no “$5.99 today only” or follow up “and you’re now subscribed to our automatic program”. He offered a product at a price honestly and that’s a huge part of why it worked.

But it’s apples and oranges; his product required an initial investment and then just a transaction fee for every order – a far cry from a service where every client is a new work effort.

There are designers all over the web trying to get people into starter or free packages to upsell them later or rope small businesses in with some annual commitment – there’s nothing game changing about dividing a cost into payments or producing a loss leader.

Disrupting a service market means finding a way to solve a problem so rather than focusing on the tactic first I’d suggest you look at what it is businesses actually need. Figure out their pain point and you can find your disruption.

I’ve given tons of stuff away for free and earned a few million in the process. I’ll share a bit on what I’ve learned about free.

njwebwiz’s, I think it’s a brilliant idea to give things away for free, but I think you have completely the wrong approach. The only purpose you’re giving away for free is so that you can earn more (via attracting new customers who have deeper wallets). You seem willing to give only to the extent such giving increases your future earning. You seem to want a Return On Investment (ROI) for that which you give away for free.

I believe it’s a flawed approach. Free, ironically, makes you more money when it’s motivated by a desire to share rather than a desire to profit, something Ted S touches on above. That’s how Facebook, Google and others started - there was a desire by the owner/s to create something that enhanced people’s lives. These businesses didn’t start out huge. The owners put dedication, sweat, money and genuine effort into creating useful free resources. Even when repeatedly told by all the “experts” in the world that their “business model” was broke and they would never break even … they persisted!

Give without expecting anything back and you’ll get back more than you expect (or even dreamed!)

My own story: By some accounts I’m considered an expert on buying web businesses. I’ve written Sitepoint’s article on Valuing Websites (free), I’ve provided hundreds of pages of (free) expert advice on my UK [URL=“http://www.experienced-people.co.uk/”]site for buyers and sellers of websites/blogs. My (free) report/article in there on how to make money online with websites is usually at #1 in Google UK for [I]make money online[/I] - a very competitive term and has had millions of pageviews. I run a (free) [URL=“http://experienced-people.net/”]forum to discuss buying, selling and monetising websites. Free, free, free.

I make a bit of money from Adsense on some of those pages and I occasionally sell a banner ad on the .co.uk site. But I did also benefit over the years from people contacting me, uninvited, to solicit my personal involvement advising them on a sale/purchase. Many have paid me five figure sums for a couple of days work such as doing due diligence on a $1M+ acquisition their company was making. (Readers, please note, I am retired and no longer take on this work.)

When I started the site I had no idea that these consultancy jobs would come my way. The niche nature of the advice did help, I concede. There were very few experts around in this subject when I wrote most of that material (though there are now a million copycat ebooks on “site flipping” :slight_smile: ). But I believe that free has a habit of coming up very profitable if you stick with it long enough and if it’s really useful free stuff.

If you want to play free, my advice to you would be to come up with useful content, scripts, tools that you give away for free and with no expectation of return. If you want free to work in a big way for you, don’t think small. The three “free” ideas you have in the OP come across as being exactly what they are - bait; they scream cheap, not free. :frowning:

I once owned a PC manufacturing business that built high-end, high performance PCs for gaming, video editing etc. We tweaked and tested machines and components to death. But, importantly, we shared much of that test information and showed people how they could get those same results (dumb? it could lose us business!!!). That free information so sealed our reputation in the UK a decade ago that when other companies were struggling to get orders for their £800 PCs we had a waiting list for machines costing several thousand pounds. When places like Scotland Yard’s high tech crime unit wanted new PCs, ours were the only ones they’d trust. It got so that we could throw our marketing budget out of the window - dropped it to £0 - and replace it with simply giving stuff away! Again, if we had measured the free information we were releasing and compared it against order levels …it just wouldn’t have worked!

Totally agree on the “establish yourself as an expert” thing - I’ve been hearing that for years, so maybe now I’ll get off my butt and actually do it!

I would urge you to focus on the giving and not on the “establishing” yourself as an “expert”.

@FruitMedley Post - Thanks for your comments. I agree in principle with the “give away something for free with no expectation of anything in return” idea. Clearly, it’s worked out well for Google, Facebook, Twitter, etc. But those are the 1% that “made it”. The other 99% gave away something useful for free, but ultimately failed as companies. Either their idea was stolen and/or done better by someone else or they just never came up with a sustainable business model. On a similar note, people sometimes put Bill Gates, Steve Jobs, and (now) Mark Zuckerberg on pedestals, saying, “Look! A college dropout made it big!” That’s true, but, again, for every Gates / Jobs / Zuckerberg who “made it” there are 100,000 other college dropouts who are now flipping burgers.

It’s one thing to take the approach of “give it away for free” and sort of secretly hope that some day eventually it’ll pay off" if you’re independently wealthy, have another job, or can otherwise somehow support yourself. I am not in that situation. I’m willing to give stuff away for free, but there’s got to be a foreseeable return to me. After all, I can’t pay for groceries or rent with “someday I’ll earn money from giving stuff away”.

The reality is that the odds are stacked against most people. I don’t want to be the next Twitter, assuming they can eventually figure out a business model that gets them profitable. I just want to be a successful web designer with more incoming work requests than I can handle.

Nobody likes an upsell (or a bait and switch). Big and middle level spenders are not going to be enticed by anything free, especially crappy website templates which other people will have. The only people you will attract with that are the absolute cheepskates or someone with a hobby site who isn’t willing to invest any money into what they are doing.

The only one that gives away stuff for free that is outside their main revenue stream is Google. But every time they do something, they get millions of dollars in free publicity. Such as with their email or their stupid +1 thing. They also build goodwill from users of their products many of whom will use their search engine and some of them will click on the ads. While Google appears to give something away for free, there is a motivation behind it and it isn’t truly free.

If you are in the USA, don’t forget we are still in a very bad economy. Whatever level of business you are doing, it will most likely get better when economic conditions improve even without you doing anything special.

Not so sure about this observation. There are so many companies that are successful using the freemium model, it’s growing all the time. What does it even mean to give something away for free that is ‘in their main revenue stream’? What does it mean to say that something isn’t truly ‘free’ if there is a motivation behind it - it’s still free.

Spoken like a true pessimist! Don’t wait for the economy to get better, just get in there and try to succeed. The people who are worried about the economy won’t be able to compete. There are plenty of companies doing well, especially in web services.

Think about free services like Gmail, Pandora, Dropbox, Evernote, Automattic and MailChimp. Some of those started from nothing, and there are so many others that are promising like instagram. The problem is that these are services companies, they are product companies. So, if you want to give away something for free in order to win services work you have to give something that is of specific value to your target audience but is not actual services - that usually means information but not always.

I think, if you are confident in yourself and you have all required resources, you can realize this sort of idea! You know, I agree with this magic rules: if you want to be reach, give things away for free! Also, nowadays, everyone wants to get a lot of money. Thus. You can offer something for free like it did it Truant? And then after a while to propose your goods or services for lower price. In such a way you will attract more visitors and potential clients.