The Word 'Free' Should Not Scare Small Business Owners

There is an interesting article in the October, 2006 issue of Business 2.0 by Katherine Heires called "Why It Pays to Give Away the Store."  She gives nine tips culled from venture capitalists and entrepreneurs about how a 'freemium' strategy can be successful. 

This 9 point list may scare some small online business owners.  They are already struggling with the fact that many of their potential customers expect everything for free!  I've spoken to many small business owners who marvel at the fact that their target audiences are shocked when they confront a "buy now" button. They believe everything should be free. 

The key to making a freemium strategy work is to plan ahead and never sway from your plan.  The article states, "once you've decided that a product will be given away for free, don't change your mind."  The free product should act as a good solid lead-in to an enhanced one.

The real key is to figure out ahead of time what you can do to enhance the product to entice paying customers.  Also, figure out how you can customize the product for specific audiences and sell to them.  Make sure that you interact with your customers and find out how they want to use the product and give it to them.  Giving away a free product is only a great risk if you haven't thought it through ahead of time.  If no one wants or needs your product, even a freemium costs too much.

Comments

[Michael Stelzner]

Hi Stephanie;

Sometimes the free does not need to be a product, but rather a report or white paper. In the business-to-business world this is very common. Give away a well crafted document that educates and persuades.

Mike

[RisingSunofNihon]

I think you make an excellent point here. Free products can definitely be a marketing boon if the business owner takes some time to figure out exactly what he or she will do to enhance the product, as you said. If business owners just start giving stuff away without rhyme or reason, then yes, there likely will be problems!