Free is not a Business Model. It's a Marketing Tactic
As I prepare for tonight's talk on Free for B2B, I am rwminded of how many companies still think "giving product away" qualifies as a business strategy (at least until the IPO or acquisition. Free can be a powerful way to build awareness, generate trial, enable viral growth or even create a networked effect that generates additional sources of revenue. But by itself, it is nothing more than a way to lose money quickly.
When I advise providers of digital content and services on marketing strategy, I always consider "free' options-free trials of products, freemium offerings that offer services subsidized by other parts of the business, or even beemium, where the freemium offering is ancillary to the company's core business, and attracts a key target audience for the core customer.
But when we look at "free" options, we need to think about what they accomplish for the company as a whole, and how they ultimately generate (profitable) revenue.
There are several ways to make money with digital subscriptions–and the subscription fee itself is only one of them. Other ways include a la carte offerings (one time payment, credits etc), services (training, implementation), products (hardware and educational materials), partnerships (white label, cross marketing), aggregated-data-based offerings, and even advertising–although it has fallen out of faction.
If you find yourself in a conversation about giving something away, remind your colleagues that there's no such thing as a free lunch, and if you're not getting paid for the value you provide, someone might be eating you for lunch!
