Is it possible to give away your products or services for free and make more money? Conventional wisdom says NO it is not possible. So how come Television and Radio stations, internet companies particularly Facebook and Google are making more money every year using a modification of the ‘freemium’ business model? The traditional freemium model provides a product or service that is free and the premium part comes from offering the free platform users additional products or services that for a fee can expand or improve their experience while its modified version offers other companies access to these users who form part of their target market.
Facebook and Google’s income comes from advertising other products and services during the time their users browse their websites. The longer you use Facebook and Google the more adverts and money they charge advertisers on their platform. Get it now? Offer a product or service for free to attract users and then offer other products or services to actual customers who will pay for them to be able to reach your non-paying users which are their own target market.
How do you successfully adapt the freemium business model to your particular business? You need to think creatively. Some examples:
Example 1
The biggest challenge for hotels is how to get visibility without spending so much money on advertising so consider giving out your event halls for free. Customers get the hall for free, pay competitive prices for the food and tell other prospective customers about the hotel.
Example 2
A new games arcade’s challenge is to get kids to use their facilities. Consider allowing very young kids to come in for free but all other kids above 16 years old must pay. Parents are very protective towards their kids and will definitely accompany them to the arcade so you make money from the older kids and adults who have to escort the younger kids.
Example 3
A car sales company can offer free car service to their customers for the first 10,000km or any other milestone it can set.
The Tip
The trick is to offer a product or service that will attract users who can be sold other premium products or attract users who are the target market for other customers willing to pay to gain access to them.
