The Value Of Free

I recently met a thoroughly decent chap called Chris. He’s English and has worked in Cape Town for the past few years. He has a friend called Matt, who’s American. Matt is no ordinary 25-year old. He is a darling of Silicon Valley. His latest trick was to secure a further $30m of funding for web endeavours he founded. Matt is best known for WordPress. Turns out that I use his very gear for this salespodder blog.

One of the ways Matt is purported to have made money, is by actively giving away use of his kit for free. The idea being that passionate individuals can share and discuss their hobbies for no cost, whereas when corporations want to pursue commercial ends, for the tweaking involved a charge is levied.

It seems a winner. But in reality, how many of us offer products that have both an individual, non-commercial application as well as a corporate angle, and also lend themselves to be given away in one environment whilst commanding fees in another?

Even though barriers loom large in my mind, I am intrigued by this idea. Especially given our credit crunch created recessionary times. I think that rather than framing it in terms of ‘gratis’, arguments exist within the realms of ‘loss leaders’.

What is it that you can provide free of charge that will likely encourage purchase of something else that you sell?

Of course, any such offering ought to have little margin impact, and preferably have a Marginal Cost of pretty much zero (that means that by providing one extra unit of it, the cost to you is negligible).

Then you need to build a progression path, a way that people utilising and enjoying your toe-in-the-water can readily take on board more of what you provide and pay for it.

For many firms this will be a radical departure, but I look back to the many salesteams I’ve worked within and helped out and can see several opportunities for isolating one part of their offering to draw people in to the rest.

The question is, do we have both the creativity and patience required to see such a policy through?