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Robert De Merode

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Free! Why $0.00 Is the Future of Business
12/30/2009 7:24:32 PM's a totally radical thought.
Could you imagine movies at the theater...being FREE.
And I mean totally 100% free - no catch.
Believe it or not...this is being considered.
Some chains are considering making movies free - but charging a lot more for the concessions.
Just imagine how this could change business...
I have long talked about the Power of 'FREE'.
Once a marketing gimmick -- now 'free' is a full fledged economy of it's own.
Lets look at a little known company called GOOGLE. Heard of them?
But have you noticed how virtually EVERYTHING they do - is FREE. Think about this for a moment. This clearly is no accident.
How can they do this and yet still be worth billions?
The simple truth is - they funnel us consumers in for free - and then introduce a selection of paid services (Adwords for example).
Giving away something for FREE at first -
is a key strategy you need to understand and implement.
But does giving away something for free mean it takes longer to make money online?
I'd have to say yes. It took me 6 months before I made anything.
But does this strategy work?
Undoubtedly 100% YES.
I realize I go on about this time and time again - but I still see a TON of people online try and SELL immediately.
Wrong wrong wrong wrong wrong.
Delivering VALUE first - in the form of something that is free - is the way to grow your business as we enter the 2nd decade of the 21st century.
Free is the future -- this is how to create and grow a business. And you will make your money by upselling related products/services -- but you need to capture your target market's attention first.
The Power Of Free
At the age of 40, King Gillette was a frustrated inventor, a bitter anticapitalist, and a salesman of cork-lined bottle caps.
It was 1895, and despite ideas, energy, and wealthy parents, he had little to show for his work.
He blamed the evils of market competition.
His boss at the bottle cap company, meanwhile, had just one piece of advice: Invent something people use and throw away.
One day, while he was shaving with a straight razor that was so worn it could no longer be sharpened, the idea came to him.
What if the blade could be made of a thin metal strip?
Rather than spending time maintaining the blades, men could simply discard them when they became dull.
A few years later, the disposable-blade safety razor was born.
Over the next two decades, he gave away millons of razors to soldiers in the war, hoping the habits soldiers developed at war would carry over to peacetime.
He gave razors in bulk to banks so they could give them away with new deposits ("shave and save" campaigns).
Razors were bundled with everything from Wrigley's gum to packets of coffee, tea, spices, and marshmallows.
The freebies helped to sell those products, but the tactic helped Gillette even more.
By giving away the razors, which were useless by themselves, he was creating demand for disposable blades.
A few billion blades later, this business model is now the foundation of entire industries:
• Give away the cell phone but sell the monthly plan
• Make the videogame console cheap and sell expensive games
• Install fancy coffeemakers in offices at no charge so you can sell managers expensive coffee sachets
• Make printers extremely inexpensive yet charge $20 a pop for the ink cartridges
• Give away a free eBook so you can upsell the video version of the book
Thanks to Gillette, the idea that you can make money by giving something away for free - is no longer radical.
Are you beginning to see how your web business should work...
So...where do things go from here?
• Future scenario 1:
Low-cost digital distribution will make the summer blockbuster free. Theaters will make their money from concessions -- and by selling the premium moviegoing experience at a high price.
• Future scenario 2:
Ads on the subway? That's so 20th century. By sponsoring the whole line and making trips free, the local merchants association brings grateful commuters to neighborhood shops.
• Happening right now:
When Wal-Mart charges $7 for a new hit DVD, it's a loss leader. The company is offering the DVD below cost to lure you into the store, where it hopes to sell you a washing machine at a profit.
• Happening right now:
Your cell phone company may not make money on your monthly minutes -- it keeps that fee low because it knows that's the first thing you look at when picking a carrier -- but your monthly voicemail fee is pure profit for them. Clever huh!
• Happening right now:
In 2007 The New York Times went free; in 2010 so will much of The Wall Street Journal.
A psychological switch has been turned and things are flipping towards zero.
From the consumer's perspective, there is a huge difference between cheap and free.
Give a product away for free and it can go viral.
Charge a single cent for it - so it is seen as 'cheap' - and you're in an entirely different business, one of clawing and scratching for every customer.
Don't do it.
The huge psychological gap between "almost zero" and "zero" is why micropayments failed.
It's why Google doesn't show up on your credit card.
It's why modern Web companies don't charge their users anything.
And it's why Yahoo gives away disk drive space.
Look at Craigs List. A Free Listings site that made $50 million last year from the few things it charges for.
And in a lot smaller way - it's why I have been able to build a list of almost 20,000 in less than 2 years which has changed my life completely.
The moral of this story?
The winning companies make their stuff free first.
Are you?

Article From Chris Farrel

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