How did you monetize your free service?

[tayjooann.com]

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Hey guys,

if you own or are planning to own a web-based company that deals with digital goods, i guess you will come in contact with the problem of monetizing your services?

Not so much for contractors like web design firms that operate online, but services rendered free such as classifieds, search engines and applications that build on externalities (the more users, the better)

My accountant often challenges us with the question – How can u capture value… and its definitely worth a thought. Even Google had problems trying to monetize google maps.

I’m sure we all have been there, and if you have already done that, do share!

[Geronimo]

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The thing to understand about a lot of the free online sites and applications, is that they’re in the information business. By offering free services, people use them, which gives them information to sell to a third party. I’m not talking underhanded and shifty at all, but it’s the business model they use.

So they are getting money, just not from the people using the service.

[createdevelop]

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There is no such thing as a free service. If you are giving something away, make sure that you can capture someone’s information, and the cost to you is marginal. Make sure you are using their details to send more information to. If you have something that is free as in classifieds, you have to make sure there is some incentive to use the paid for service.

[1stContact]

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I think using a “Freemium” business model can really help web-based company that deals with digital goods. It works by offering a product or service free of charge (in this case classifieds listing ect) while charging a premium for advanced features, functionality (such as top billing within the classifieds).

Offering Freemiums has been used by some category killer companies such as skype, LinkedIn and ESPN to great effect.

We also employ this business model and it has worked a treat.

Hope that helps.

[fredfarcle]

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I like the expression “Freemium model”, from my perpective as a small operator, this is essential to even get me to try a service or app.

Once I’ve given the service a good shakedown, I’m happy to pay if it’s value for money and fits my needs.

Over time I’ve replaced nearly all the desktop software I use heavily, with web based stuff.

With most desktop application software you tend to bend your business to fit the software and become captive to it. I am finding with web based apps. I have more choice to use models that suit how I want to work, tough on the developer trying to find a niche to monetize but rewarding if you get it right.

As a consumer I’m enjoying no longer being ripped off by beta software being passed off as a premium product, if the product or service is crap, I just move on.

I think there’s still huge opportunity to monetize web services but instead of trying to build the next world beating social network, developers need to get out into the long tail and look at industry specific apps currently dominated by often second rate and expensive (because it’s industry specific) desktop stuff.

In my own small client base I now they will pay for software that works but they don’t want to secure it, update it, back it up, or waste time on a huge learning curve working it out.

[Author]

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