Giving Things Away For Free (profit, pay, balance, purchasing)

[aaauger]

We give a lot of information and support to prospects in hopes that they will gain confidence in our abilities and purchase with us. That's considered to be best practice in marketing. But this approach has some drawbacks. If they purchase, we've essentially discounted our product. If they don't buy, we've wasted our time and intellectual property.

This economy seems to be a game-changer. We have had situations where people work with us to learn and plan, then buy a cheaper product. We've even had people return after purchasing elsewhere, asking for support.

Giving things away for free: does it build goodwill or does it devalue?
How do you help a prospect and help yourself?

[killer2021]

I've structured my entire business around the freemium model. It works good if done right. For example I give 25% of my product away for free, as in 100% free. If the person wants the other 75%, they have to pay for it. I get very good conversions on my product as I have developed an insanely good product that the competitors simply cannot compete against.

I can tell you that it doesn't devalue your product as long as your provide good value. If people are purchasing other products from competitors then you might want to consider if your price point is the right one to have.

Also make sure that your free offer has a low cost to you. I am not sure on what your product is but for me, my product is a website so the cost of 10,000 people using the, "free" portion of the site has a very low cost to me. Even if only 100 of those people purchase the product then it has been profitable for me. The cost of delivering the 10,000 people the free service cost me basically nothing. Meanwhile, there are billion dollar companies out there that charge big money for the product I am giving away for free. Talk about a major game changer.

I would recommend reading this book:
Amazon.com: Free: The Future of a Radical Price (9781401322908): Chris Anderson: Books

Its about how giving stuff away for free is an insanely brilliant marketing idea. Obviously you don't have to look any further than google to see how brilliant the freemium model is. The basic idea of the book is to give xyz product away for free but make money selling some other good or service. In the business world is a huge game changer because some people are giving away goods and services for free that other businesses used to charge for. Take for example google satellite maps.

[aaauger]

Killer - Great post. I will get the book today. I think our balance is skewed - i.e. too much being given away for free. People rave about our free stuff. So apparently our quality is good. You may also be right about our product price point. Our product is physical, so it's really hard not to be perceived as a commodity. So maybe we make some money on our related services.

BTW, speaking of Google, have you seen Google Sketchup? A very cool tool. Again, part free, part fee.