Should You Charge? Or Give Your Cool Stuff Away For Free?

Authors rarely give their books away for free, and no wonder - their profit is found in marketing their information to a willing and eager market. Think of Law:If the market demands, the supply will sell. It doesn't matter if the demand is orchestrated by greedy businessmen trying to create a "consumer" based society*

The same goes for cable TV, lots of newspapers and most magazines.

But on the flip side - is it cost-effective to charge? Giving something away for free drastically increases the amount of people who want the product. People who don't even necessarily want the product can rationally deduce that accepting it hurts nothing - as long as it's free.

Or, in more technical terms: If there are secondary means of monetizing information, and giving something away for free increases sales, is it cost effective to focus a lot on the secondary means of monetization rather than the primary means?

There are two camps to the debate, and for the purpose of disclosure, I prefer the "free camp" for most niches. However, in some high-demand niches with little secondary monetization mechanisms available, the "charge camp" is certainly the more tenable position. Let's look at both sides and analyze the reasoning.

Charge!

The idea of charging is received in two knee-jerk ways - "of course" and "what the heck?" For those of us who labor intensively in providing our online text-based product a regular basis (read: "we have a blog!"), the question is vital to our very survival.

The typical reaction for the online blogger is "but no one will read my services!" Unfortunately, this is mostly true. For the start-up blogger, asking people for money for a secondary before building a reputation puts potential subscribers at risk. Along with that, charging for all of the products/services/content before building a significant relationship can seriously hamper future growth and, hence, profits.

On the flip side, if you have a strong user base that trusts you, charging for a special product isn't just a good idea, it can be literally life-changing. Do the math: If you have 300 people who want your content and are willing to pay $9.99 per month, that's roughly $3,000. Per month. That's 36k per year, which isn't bad at all. Of course, with the cost barrier to the subscribers, any negative "periods" (an off newsletter, giving the service a bit late, etc - anything sub-par) are worse. Your subscribers have a financial incentive to unsubscribe, meaning the job is suddenly more demanding.

The ideal package is the package that maximizes both per-action profit and traffic. Free traffic from free content coupled with paid-programs is a deadly revenue combination.

On the flip side, there's a camp that advocates most of the information, publications and other digital resources being free of charge. This is the age of the professional blogger, the rise of the individual who says that one doesn't have to charge money to make money.

Free-dom?

People like free stuff. Free stuff is a no risk investment - statistically, it makes sense to accept something if it's free, because it's a possible gain with no risk. Provide valuable content for free, let people know of its existence and a steady base.

With that base, of course, comes more traffic, which means more profit. The only question is: will more money be made by giving the information for free, or by charging for it? Chris Anderson, in "Free! Why $0.00 Is the Future of Business" argues that free content provides a more free money flow, going through history, and looking at scenarios ranging from throw-away shavers to websites. He comprehensively explains why freedom is the way of the future.

The "Make Money Online" internet niche seems soaked with both free and paid resource. Unfortunately, both of these resources tend to be filled with prattle rather than invaluable and helpful information. Providing free resources either as a primary or secondary "hook" to keep visitors on a website works.

The way of the future on the Internet is freedom. The free flow of information is more than just vital to our economy. People have come to expect it. With the literally thousands of ways to monetize a website, charging for content isn't just necessary - in most niches, it's destructive.

Keywords: