The real cost of free

June 7, 2010

Why not make it free?

Lots of startups have to answer this question when considering what they charge for their new products or services.

Here is a good answer, as re-told to me by an NGO worker I met in Africa, who faces an expectation of providing things for free both from the poor people he is trying to serve and the rich donors who enable him to be there:

When you ask me to give something to you for free, you are giving me all the power - to choose who gets what and when. And, to be honest, I don’t believe you really want to give me that power.

When you pay me you create an expectation that I will deliver value for money. I may or may not, and that is the risk you take, but the expectation exists nonetheless.

There is no such thing as free!

Yet, just about all of the web services I use most frequently appear to cost me nothing: Google, Gmail, Reader, Twitter, TripIt, Connect, DropBox, Delicious, not to mention all of the free news sites. Would I pay for any of those? I don’t know. In the very least it would probably cause me to reconsider the value I’m getting in return.

WordPress is a good counter example. While there is a free version, I choose to pay a few dollars a year to use my own URL, which effectively buys me freedom to switch this site to a different provider in the future if I choose to. In a tiny little way, and a much larger way when you aggregate across millions of users, that keeps them on their toes.

It’s worth thinking about what you’re giving up next time you appear to get something for nothing.