There is no doubt that free can lead to huge user bases and massive adoption. In the face of venture capital or existing cash stores, the siren call of free often sounds like a low-risk bet on future profits. In practice, free is a costly mistake that businesses and small developers should avoid, and users should run away from like the plague.
You know what makes it easy to scale quickly? Money.
I don’t understand free apps with wait lists. In fact, I don’t understand free services when there are cost-dependent resources: servers, licenses, employees.
There are three business models in Silicon Valley:
- Provide a free service with no clear business model. Sell it to Google, Facebook, Apple, Dropbox, Twitter, or another large company.
- Provide a free service supplemented by ads. Optionally, charge a subset of users for additional features, or to remove ads (“freemium”).
- Charge money in exchange for goods and services.
Call me “old fashioned”, but the third option seems to produce the most reliable business model.
Is there an irony in writing this on a website which is provided for free and (as of now) has no advertising? Sure. But I don’t aim to do this for a living, so I sure as shit won’t be selling this site to Yahoo.
Great post slug, too. ↩︎