The usual thing in business is to make money by selling a product or service. However there is an alternative in just giving it away! Is it possible to make money by giving your product/service away? Well, obviously at some point you have to sell something for money in order to make money, but giving something away is definitely one way to facilitate selling something for money.
Two common models in which a a product/service is given away in order to make money later are:
Give Something Away to Sell Something Later
This involves giving away a product/service – for instance, a limited service or a product with limited functionality – in order to sell a product upgrade, or in order to sell the continuation of the service. Here are a couple of examples:
-
Solicitors, accountants, financial advisers, etc., often see a client for free in the first instance. Typically this will range from half an hour’s to an hour’s consultation, with no fee and no obligation. The money making idea here, is that the client will require significantly more time that can be charged. The initial free consultation draws in the client because, to the client, there is nothing to loose by having the initial free meeting. At the same time, this gives the consultant a chance to convince the client that it is they – i.e. this consultant, as opposed to a the competition – who can best serve the client’s needs
-
Software products often have a free version given away with the idea of selling an upgrade. Actually, it’s not just software products, but they make good examples because it’s so common with software. There are two common variations: one is to give away a basic version with unlimited use (time wise), and the other is to give away a fully functioning version with a limit on the time for which it can be used. A good example of the first variation is found in products such as virus and spy-ware checkers, and personal firewall products. Several of these are given away in a version with limited functionality. Another variation is to give away the product but with a license allowing only limited use – for example, allowing personal use but prohibiting any form of business/commercial use. Naturally, the limited license and limited functionality ideas can – and often are – combined. A good example of the second variation – i.e. the trial version that stops working after a limited time – is the trial version of Microsoft Office found pre-installed on many laptops
Give Something Away To Gain/Enhance Reputation
This is a less concrete give-away model that involves giving away time and information in order to promote a product/service by enhancing reputation/credibility. This is a much less tangible model than that (above) of giving something away with the idea of selling later; that is to say, it is very hard to measure how the expenditure of resource (predominantly time) involved in the giving away translates into actual revenue. Here are some examples:
-
Experts are often found giving away their knowledge on forums on the web. This can build confidence in their expertise – that is, the expertise of the individuals, the companies they work for, or both – among the community in which they sell (or wish to sell) their services. I remember a few years ago, coming across the case of a mechanic who specialised in high performance cars, who freely gave away his help and advice on the enthusiasts web forums. His reputation was such that high performance car owners would travel hundreds of miles to get their cars serviced by him. Also, when someone I know found it necessary to look into a legal matter and familiarise himself with the relevant law in a certain field, I discovered that there are quite a lot of solicitors out there who spend quite a lot of time giving away their knowledge on web forums
-
Business’ web sites often carry articles, written and given away for free. The model of how this translates into revenue is pretty much the same as that where experts give away their knowledge on web forums. Again, it is common for legal firms to carry, on their web sites, articles on the area of law in which they specialise
Finally
Giving away products/services in order to build brand recognition is all part of inbound marketing – although this is a bigger topic with a lot more to it.
Are there other ways of making money by giving something away? If you know of any please comment, whether it’s a tried and tested idea or something you’ve thought of that you think will work.
