Give it away

I originally posted this as a comment under the 37 signals blog post How did the web lose faith in charging for stuff.

If you don’t have something of real worth, or aren’t willing to work hard to get your customers, or don’t have the skill to compete head to head in the market, then by all means charge for your software. There are always a few suckers out there to think Y costs more than X so it must be better. Your hobby project will probably net you a few dollars to buy candy after school or if you save it up, some little gizmo that has a light that blinks when you push a button.

Look at who’s talking here — 37 signals exists only because of free stuff. I can count the number of paying users they have on one hand (but only because I have six fingers on my right hand.) All of their money comes from consulting, because they invented two things and gave them away for free — rounded corners, and Rails. It is their reputation from giving away stuff that gets them clients.

Google controls advertising, so if you have viewers, you have value to Google. TV existed solely on advertising, and radio, magazines, and newspapers before it. So can the internet. The token subscriptions for print until recently only ever covered shipping. There is no shipping cost on the internet. If your application is 2 gigabytes, by all means charge a 4 cent download fee. But your competitors are going to laugh at you and pay 4 cents to everyone on the planet (that’s only $240 million) for the advertizing.

Free software *IS* advertising. And it’s better than a flash banner video clip with a wack-a-mole celebrity endorsement for herbal viagra delivered to your front door every morning by a spokesmodel. Because only people interested in your product will download it for free. And if they like it, they’ll tell all their friends. Or keep it secret and build a business model to monetize what you’re giving away. But then they’ll probably hire you as a consultant to improve it.

2 thoughts on “Give it away

  1. Some people still don’t understand the market, even if they happen to be successful in it.

    The sense of entitlement that is sweeping the collective consciousness of people is frightening.

    In the comments to the above linked post, the consensus was that customers *owed* it to the would-be entrepreneurs to buy their products — and that’s only a step or two away from “at the point of a gun” — like car (and soon medical) insurance. And that anyone giving away stuff for free had wrong-headed, and probably evil intentions, and should be regulated against.

    Obviously it’s from frustration that their products aren’t selling and they don’t know why. There are two simple reasons in every case:

    1) The other free product with millions of users is better.

    That’s why millions of people use it. Cow chips are free, but even in dairy states where they’re plentiful, Doritos are still more popular, even when they’re not on sale.

    2) Your competitors are paying more for advertising than you are.

    That’s right giving away their software is free advertising. Only it’s not free, because they have to spend their time to write the software. But once the time is sunk, there’s (practically) no additional cost. Users wait in line to get advertising from them.

    Software is a service industry, because it doesn’t produce a product. Just like writing. Publishing is a manufacturing industry, but publishing costs a fraction of a cent per megabyte these days.

  2. That said, don’t you want to pay for my software as a subscription service,

    As an added hypocracitic bonus, it’s built on the back of free software.

    The catch is, I only charging to recoup hosting and a fraction of it’s related support costs.

    I’d be swamped with support way before I was profitable — not that I think someone with better skills in that department couldn’t do it profitably.

    I’m in the services business.

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