Would you work for free? The answer is often a resounding no. The purpose of a business is to earn profit, which comes from the sale of goods or services that are in demand. Yet in the digital era, giving away a service for free can reap long-term benefits. Below, we discuss why you should consider giving away free services.
The Advantages of Giving Away Free Services
The digital age has made all businesses competitive. Whatever field you are in, you will have multiple competitors competing for the same customers. It makes sense that these people are going to go to the products offered for free before others. Not only does this allow people to try your product out, but it also vastly increases your user base, quickly building hundreds of followers.
By offering a slimmed-down service or giving away free services, you are providing a taste of what you can do. From here, you can upgrade customers to the models mentioned below. This makes the free service an extension of the sales funnel and an exceptionally strong one.
Using a Freemium Model
A freemium model is a way to make money from a free product. It involves providing people with a basic service. Once they desire extra functionality, they can either make purchases or sign up for a higher-level recurring subscription.
The ways to make money from freemium models can further be broken down into three areas. The first is through consumable products. These are used once and then vanish. Most popular in games, they involve items such as skins and digital currency.
The online casino industry is one area where this has been used to full effect to bring in customers in emerging jurisdictions. Games will be offered for free and players don’t have to deposit at the provider’s casino to play. However, to use games where they could potentially win cash payouts, they need to upgrade by making deposits. For example, if you’re looking for good Michigan online casino no deposit bonuses, the casinos here have many that use an adapted freemium model.
Second are non-consumable products. They add a feature to a client’s account permanently. For example, if you offer a basic bookkeeping service online, they may add the ability to do tax or to link to a bank account.
A subscription model is the third option and most comprehensive. Instead of getting the basic service, customers can pay a weekly, monthly, quarterly or annual fee to use the enhanced services. You may encountered this on services like Spotify. The basic service has ads, and the next service which is paid for available without them.
Other Ways to Make Money From Free Services
When giving away free services, you can make money using alternative methods. This means that even though the customer is not paying, you are still earning a profit. Below are the most common ways to monetize a free service.
Advertising
Advertising is the most common method of making money from free services. These are most common in apps, but you can find them in other areas such as streaming services and websites. It involves embedding an app in the form of video, images, or text, which are shown to the user at various points. The advertiser then pays you for the service.
Referral Marketing
Referral marketing is closely linked to advertising. It involves directing consumers to the products or services of another company. When they make a purchase, your business is paid a flat fee or a percentage. You can do this by embedding links in text or showing videos which will persuade them to buy the products.
There are whole websites built around this concept. Most flights and travel booking sites are referral services. They will take a cut of any profit from bookings they have recommended to the people who use their app for free.
Sponsorship
Sponsorship is another option; This is similar to advertising, but it involves a long-term partnership with a company or brand. It works best when you are being sponsored by a company in the same vein as your product or service. For example, a company that is based on interior design may be sponsored by a furniture retailer.
Crowdfunding
Another option is crowdfunding. This has become particularly popular in the digital age, with companies such as Patreon and Kickstarter set up especially to do it. You put a product online, and people submit funds to get it made or created. If you reach the total, you get the money and create it. If you don’t, then they get their money back.
Giving away free services is not for every company. Discuss it with your team, and make sure you crunch the numbers. If you are losing clients to competitors, it may be time to make a change regardless. Get the software in place, build your followers, and then convert them from free to paid members.
