Monday, October 31, 2011

Free vs. Fee

A friend of mine is a computer wizard. He is an uber geek who has switched over to Linux, but does other people's Windows. He asked my advice about marketing a software product--giving it away for free, but asking for an installation fee. My first questions were:
  1. What is your business model? How do you make FREE pay?
  2. A corollary of 1, but from the customer's point of view: What's the catch? If it's free, how do you make money on it? And is it available anywhere else for free?
  3. If it's free, why do I need to pay to get it installed? (Once you wave the FREE flag, you need to cautiously segue from free to fee.)
  4. Can you make a value-added version of the free one that you can sell as an upgrade?
  5.  Can you add ancillary services or products for upselling or cross-selling? This sounds like a great introductory offer. But introductory offers are not where you make your money. You need to work the back end. As Bob Bly writes, "The bulk of your profits will be made on the back end (repeat sales to existing customers), not the front end (the first sale to a new customer). Therefore, creating and selling a single product with no back-end is almost never profitable."  Terry Dean offers similar advice.
  6. Maybe start with classified ads with links to a landing page.
 What would you add?

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