Wednesday, February 25, 2009

Valuing Free - What will you pay for something you always received for free?

Many web based free services, including from market leaders like Google, are shutting down. From Boulder, recently Andrew Hyde called R.I.P magnolia a Boulder based startup. Is there a problem in giving away a service that adds value for free? I believe there is. Most web services focus on building user base with the hope of Ad supported business model. While free is never a good business model, the dependence on Ad is coming under severe threat more now than ever in the past.
Can't these services simply start charging their subscribers for the service? The problem is if your users never paid for it and if alternatives are available their reference price for the service is $0.00 even though they may get great value from the service.

For a related article on increasing reference price from $0.00, see my article in my Unbundled Pricing blog.

Join the Boulder Net LinkedIn Group!

No comments: