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Free Products and Profits

     There are a bunch of websites offering free stuff on the internet. Let's see if those free offers really can help you to make money.

Sell from the Beginning

     It's getting less common, but some websites offer products (especially memberships) for free, and then start charging at some later date. It's OK to offer free trial periods as long as this is clearly stated, like "first 3 months are free." However, don't give the impression of free-for-forever if you are planning on charging later. For example, no one expects Facebook to become a paid membership site. If they started to charge tomorrow, they would receive outraged responses from users, and would end up losing many of them. As a result, Facebook could have more users if they had started charging from day one. If you are selling something, sell it from the beginning.

Free vs. Premium Versions

     One method seen more commonly these days is the offer of a limited version of products for free, followed by the option to upgrade to a premium paid version. For example, with Adobe's Photoshop.com, you can use Photoshop for free. However, you can only use limited features; it does nothing more than average photo-editing software. Anyone who wants full features has to buy a premium membership. Statistically, only 1% of users actually buy the premium version. A 1% conversion rate isn't too bad. However, in this case, you need to serve 99% of free riders by the profits gained from 1% of users. You need to double check to see if you can balance the books.


     The most popular revenue source today on the internet is advertisement fees. Almost every business plan of today's start-up websites contains an offer of something for free and making money based upon ad revenue. As a result, advertisement fees will go down due to supply and demand, and it will become more difficult to find advertisers. Moreover, don't forget Google bought two ad companies in November 2009: AdMob and Teracent. At this point, it is getting monopolized. For now, using AdSence and other ad networks generates good revenue. Feel free to use these networks, but don't rely on them.

© April, 2010