Stop us if you’ve heard this one before. A business is giving products away. When a surprised customer asks how the company can make money distributing free products, the answer is familiar: “We make it up in volume.”
With more and more companies adopting Free as a preferred pricing strategy, some executives aren’t laughing at this old joke so much as they’re taking it to heart. Free is well on its way to becoming a sustainable, meat-and-potatoes business model for companies that make money by giving something away.
It’s one thing to speculate about Free as an intellectual exercise. What if you stopped charging for your products? How would competitors react? How would finance react? What would be your next move? But when the speculation ends, companies that are serious about testing the waters of Free often benefit from a set of rules and principles important to its successful application.
Authors: Denys Aguirrebeitia, Maggie Laird, Mike Simonetto
Source: Deloitte Review