I received an interesting question the other day in regards to charging vs. giving away a product. Someone was struggling to decide if they wanted to give their product away or charge for it and was wondering if I could give them some advice.
I must say, it’s a difficult decision to make. I’ve had to make this decision a few times and I always struggle with the answer. Making money is always a huge step, but so is generating a buzz for free. For the most part, it really comes down to the product at hand and your business model.
Here’s a look at the two options and the advantages/disadvantages to each:
The Case for Charging
Obviously charging will be preferred for most items. It gives you the ability to earn income from your products (and services). Most importantly, it gives your customers (or readers) a way to pay you. This is an important step because without charging, you can’t run an effective business.
The important thing is to not feel guilty about charging for something, especially if it required you to do a lot of hard work. It’s true that some people might be unhappy with you charging, but the truth is the majority of people will appreciate your efforts and pay you accordingly. If it didn’t require a lot of work and you can’t fight the guilty feeling, perhaps the product should be given away free of of charge?
The real challenge is finding an effective pricing strategy that works for you. This usually requires a bit of trial and error to get right, but once you establish a good structure it becomes much easier. Don’t be afraid to test different rates and prices, especially if you are just launching a new product or service.
The Case for Giving It Away
Giving things away for free is a great way to build your credibility. It’s also a great way to get your name out there and attract business. To this day, one of the best methods I have used to attract new clients is through free video tutorials. At least once a week I receive a new lead from someone who saw a tutorial I created and would like further help on something more specific.
Another great example is Change Your Life, a free ebook I created awhile back about how I made a plan to quit my job. It’s short, but to the point and I’ve received a lot of great feedback on it. When I created that book, I had no intentions of making any money off of it.
Giving away free items is very effective at building your readership and client base. It’s also a great way to get noticed, especially if you’re amongst a large crowd or busy field. This is especially true in the digital age where there is so much free information available.
The Perfect Combination
Keep in mind, that at some point you do need to charge for a product/service in order to expand your business. This is where the combination product can be very valuable. In other words, you can combine both a free product and a paid product into a similar product/service.
One example would be offering a free version of something with an option to upgrade to a paid premium service. This not only offers the freebie users something, but it also lets the people that want to pay you do just that.
Another example is creating a free product designed to not only benefit the customer, but also to convince them to upgrade to a larger service or product. Yes, this can sometimes be considered sleazy but it is an effective marketing strategy.
Last but not least, you can also find ways of monetizing a product without passing the cost on to your customers. A great example would be launching a highly successful ebook. Instead of charging for it, you could instead contact a few potential advertisers and offer them an ad spot somewhere in the book.
You could then use your stats to your advantage and sell them an advertisement based on the amount of people that download and read your book. This would earn you some money, while still keeping the book free to your customers (though you would have to test this out to see if it’s actually effective).
The Winner Is Both
As you can see, both options have their advantages and disadvantages. I personally think that offering both free and paid products/services is the best business model. Combining the two is a great way to build an effective business because the free items bring in customers and then you can monetize your business with the paid products/services.
What’s your take?