ideas worth stealingThe price of free
During SxSW Interactive 2008 recently, one word popped up over and over again as speakers and attendees alike talked about applications they’ve worked on or recommended to others.
The word was “free”, and it was used in a variety of ways:
“You should try AcmeWidgets—it’s free.”
“AcmeWidgets is a free web app you can use to process widgets.”
“I use AcmeWidgets—it’s free!”
They stressed the word free like it had the mystical power to entice anyone and everyone to drive over to the site and sign up. Like it was the most important word in the sentence.
Then Jason Fried (37signals) said something that contradicted them all. He said (and yes, I’m paraphrasing), “People always wonder how to monetize their apps, and the answer is to charge for them.”
The implication, of course, is that if something is valuable, people will pay for it. They’ll shell out a few hard-earned bucks each month to take advantage of something they find useful, advantageous, and effective. Something that improves their lives.
And Fried was right. But not about whether to charge for a service or give it away. Rather, he was right that the price of an application is much less important than another, much more meaningful word:
Value.
The value of an application or service is what draws people in. It’s what keeps them there. It’s what they seek, and it’s what causes them to make the decision to use the application in the first place. But in almost every case, the word free was used in lieu of even a half-hearted description of an application’s value.
When we talk about the products we’ve invested our blood, sweat, and tears into, or recommend another product to a friend or a room full of 300 geeky audience members, the focus shouldn’t be on how much something costs, but rather on its value.
When we rely completely on the power of free, we insult the listener and ourselves. Instead of believing our listeners will pay for something that has value, we assume they won’t. Instead of being proud of all the hard work we’ve done, we sell ourselves short and assume the only way someone will check it out is to give it away. Instead of touting the value of an application we love and use every day, we focus on its absent price tag.
But the truth is, everything has a price, and it’s often much higher than the one on the tag. The time it takes to get familiar with an application, the brain power we dedicate to learning its ins and outs, the cost of switching to another application should this one fail us—these things all contribute to the price.
If there’s value in doing so, we’ll get through it. And it doesn’t matter what the price tag says.
Focus on creating value. It makes the price worth every cent.
Posted by Robert on March 17th, 2008
4 comments
I think that you hit it right on target. If free is the only reason to entice usage, then you probably have a pretty lame product. Products and experiences should be about value that they give.
And for me, the strategy of free is associated with a long term strategy. Free can be a great marketing strategy that gets users to try something, see the actual value and then pay for the product or service.
Good viewpoint to have. I think that sometimes putting a price tag on something even increases its perceived value. “Hmm… it costs money, it must be good.”
Too bad - no links allowed.
But check out Kevin Kelly’s “Better Than Free” post @ http://www.kk.org
Given it some thought. I think have to disagree a bit.
First off if there’s 1000 similar products, maybe the only way to stand out is by offering yours for free.
Or of course giving it huge value. You’d still have to beat the other 1000 products. Which means the other 1000 have to create another way to stand out.
And you’d still have to get people to use your product and have them buzz-it. Or market it in another way.
Secondly. Apart from creating a valuable product or not, offering your product for free should and probably is part of a plan to make money somehow. Google isnt charging its users either. Besides they might even make more money this way than creating an actual product with real value.
Thirdly. The fact that there was this whole “it’s free so try it”-buzz around you, does mean they are doing something right.
You didnt hear anyone around you saying “MaxiWidgets is so valuable, you have to try it! And it’s $399,- but totally worth it.”
So basically I do agree with “Focus on creating value. It makes the price worth every cent.” But I’d say it’s the user’s free choice to go for something that’s free of cost but less in value (of use).
My advice wouldn’t go out to producers, but to consumers: “Focus on acquiring something of value. It makes the price worth every cent.”