A freemium product only temporarily drives down cost to consumers and businesses; whereas, a Free product can change the longterm pricing structure of an entire industry by increasing the purchasing power of both consumers and businesses.
A freemium is “a business model where you give away a core product for free and then generate revenue by selling premium products to a small percentage of free users” (The Freemium Blog). A Free product means that the entire product comes at zero monetary cost to the consumer.
How you may ask, can an altruistic business be sustainable? With a great product that creates better interactions / business. I could spend a year writing on the subject to convince you, but just think about this: Google search is free, and look at the stock price of Google!
How much laboring for information did the unofficial “Don’t be Evil” corporation save every Internet user by revolutionizing and refining (and refining … and refining … ) the way we search for information?
Businesses, people or organizations that want to appear higher up the search engine results, can buy advertisements in AdWords. Google’s differentiates the appearance of paid search results and organic search results. The user knows where the organic results begin. While AdWords may fund Google Search, they are two different products with different consumers. Someone searching for “tigers” is not likely to be starting a zoo or playing professional baseball in Detroit. There is no monetary fee to search the greatest cataloged resource of knowledge this world has ever seen. That is a winning business model for the consumers, and businesses.
Some believe there are no free lunches and some believe there are free lunches. I’m sure there was a lunch where you did not pick up the check, no? Just because you receive a free lunch, it does not mean that the food was not paid for. The top Internet companies will spend millions upon millions to give away the best product because satisfied consumers and businesses will create new markets. Chris Anderson explains (in “Free: the Future of A Radical New Price”) :
“Today’s Free is full of apparent contradictions: You can make money giving things away. There is a free lunch. Sometimes you get more than what you pay for.”
This is how I see it. “Sometimes you get more than what you pay for.” When a company can profit while giving away a product of value, every consumer of that company has more purchasing power, and the economy is better off for it.
The Internet has and will continue to drive marginal costs toward zero. Above the Crowd describes how the effects of free have driven down prices to consumers across the market:
“Plain and simple, Craig’s List is a massive problem for the newspapers. When Photobucket offered unlimited photo-hosting, and survived by showing ads in the admin console, the management teams at other photo hosting sites must have been at least slightly concerned. Prior to Zillow, Realtor.com charged anyone that wanted to post a house for sale on their web site.”
At SmartRecruiters, we believe no business should pay for applicant tracking or any kind of recruiting software. We believe in Free.
Photo Credit Troublmaker
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