Making money by charging nothing – The Power of Free Business Model

In General Marketing, The Digital Marketing Blog by Kelvin1 Comment

There’s a marketing strategy that’s slowly spreading that the best way to get rich is to by charging nothing. It’s gaining such momentum that it’s the topic of Chris “I invented the [tag]Long Tail[/tag]’ Anderson’s next book. And if the influence of [tag]Chris Anderson[/tag]’s previous work is anything to go on; a lot of companies will be looking into “[tag]Free[/tag]” as a business model.

there’s a few things marketers could learn from the chap in red – via flickr

Google has given away products like Analytics away for free to encourage PPC advertising. Novelists are giving away digital versions of their books to help sell paper copies & even Prince gave away a whole album on the cover of the Mail on Sunday to sell more gig tickets.

But what does this mean for online publishers and search engine marketers? And why should we give away for free what we might have charged cash for in the past.

Easier to [tag]Monetise[/tag] lots of people than a few – more than ever it’s important to own the hearts and minds of you current and potential customers. If you have an audience of thousands, people are more likely to buy your new product or sign up for your latest service. One of the easiest ways to attract these ‘disciples’ is too hook them in with something valuable yet costs nothing.

Power of [tag]Indirect Revenue Streams[/tag] – a few of you may know, I used to work at [tag]emap[/tag] in the consumer media division, recently the vultures have been circling, but their B2B businesses are doing a good job of keeping the wolves from the door. However it’s not circulations or subscriptions that’s making the Business money; but events, conferences & courses that can only take place because of the mindshare of the parent publication.

It’s not hard to see this working in an online world. Digg could launch a competitor e3 or popjustice it’s own version of T4 on the Beach. Just because publishers are directly monetising their traffic doesn’t mean they can’t make money out of their mindshare.

Think of it as Loss Leader – everyone might look back on high street shops like some kind of bizarre prehistoric dinosaur; but many of the ideas pioneered by bricks & mortar retailers can work online. The loss leader is a prime example; Tesco know that if they could get you into their shop to buy the bargain baked beans, the chances are you’d buy a whole trolley-full of groceries.

Online companies need to think in the same way when it comes to promoting themselves, give your customers a little for free & they’ll usually want more, even if there is a price involved.

Become a [tag]thought leader[/tag] – if you are there, everyday, giving brilliant advice for free and building a huge audience; very quickly you are going to be considered an expert. The more people that listen to your opinion the more valuable it becomes. It’s not surprising the search engine marketers with the highest profiles have the highest hourly rates. The greater your influence the more you can charge.

You Look Generous – never under-estimate the power of looking generous. Transparency in business is more important than ever, anything altruistic your business can do is going to reflect well on your bottom line.

I’m not recommending everyone starts giving SEO away for free, but for those brave enough to give a little away and look into a [tag]free business model[/tag], are likely to reap the greater rewards in the long term.


  1. I am a small business and am working loss leaders. Sometimes it can be a slow burner, but if you’re genuinely building value in your market it’s going to be great for reputation.

    Having said that, someone recently brought up the point that small businesses offering freebies will only attract small minded customers – that is to say those who always want something for nothing and cannot/ will not spend at all.

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