Services against payment is not unnatural. But offering free services is something most entrepreneurs steer clear from. Business advisors too, rarely advice businesses to offer free services especially in case of first time entrepreneurs. However, offering free services is one of the most powerful elements that can help your business grow.
The technique of offering free services and products for business growth and expansion has been widely followed by many popular companies. These include Facebook, Twitter, Google, HubSpot, etc. to name a few.
The idea of offering free services is a unique business model that first came into application by Gillette. The brand in its initial years gave out free razors and shaving blades with the purchase of almost any utility good. With the success that this business model achieved, it is now followed by almost every industry.
However, the initial business model allowed a person to have a free product only after the customer purchased something. With the increasing competition and changing business environment, this business model was restructured and reformed into a new one. Free now no longer means that a person needs to buy a subsidiary product to acquire a free one. The online market has placed an entirely different meaning of what free means.
If you take a look at Facebook, Google, LinkedIn, Quora or any other social networking or bookmarking site, the services are free. You can send emails for free and post pictures for free. Thus the change that globalization and digitalization has brought about is quite dynamic and powerful.
But can offering free services really help in the growth and expansion of your business? Let’s check with the examples of a few cases.
When it comes to free services, nothing can be more apt an example than the world’s leading social networking site. Facebook which now boasts nearly 1.5 billion active monthly users is constituted of those who are aggressively using Facebook for their social connections.
With a valuation of around $245 billion, Facebook continues to be a free service. However, what is free to the users is not free to the thousands of marketers who flock to Facebook for their business promotion.
While users bare out their private lives on Facebook, marketers seek for such information to make a more targeted and focused marketing of their products.
Facebook, here has been able to monetize heavily by keeping a part of its service free. With the increasing user base of dynamic backgrounds, marketers too are queueing up to make their products be displayed to make their ads visible to their target audience.
Thus while Facebook offers free services to its users, it has been able to grow and monetize with the marketing and promotional platfrom that it offers.
Can a disscussion on technology be complete without Apple? One of the world’s leading tech giants and consumer electronics manufacturers, this company too has used the business model of offering free services for expansion.
No, they don’t give out iPhones for free, but they provide other free services, one of the most prominent being the iCloud.
Apple provides a free cloud service to the users of Apple devices. This service provides users to store upto 5GB of data in the cloud space. These can include, files and documents, iBooks, images etc. This free service greatly benefited Apple. The iCloud services is heavily used by big businesses to store important documents which is otherwise not possible to be stored in the storage devices. The option of easily sharing and accessing documents has been an added advantage to most businesses.
People earlier used to purchase added devices to store important document which is ever increasing. The inclusion of the free iCloud service has more and more people using their product. This has resulted in an increase in the sale of their products.
Samsung too collaborated with Dropbox, providing free cloud service to its users. However, it was not able to make any notable impact.
Google has been an ever expanding tech company engulfing all and sundry under its blanket. The Google Play Store is perhaps the best example of offering free services to expand your business. While Apple levy charges to download application from App Store, Google provides most of its application for free. This has made Android quite a popular operating system.
Google has been successfully able to introduce in its Play Store in mobile devices as well as in desktops. This has impacted Google’s business on a huge scale.
Advantages of offering free services
The internet is one of the most competitive markets. Surviving in this market requires the marketer to have a unique set of skills apart from distinct business models. It is also the biggest market that offers a wide variety of free services.
When you offer free services, you not only promote your brand but also the premium services that you offer. These premium services which otherwise do not get noticed are highlighted through the offers of free services. For example- Unfollowers.com is a tool that gives you free service to keep a check on the number of people who followed and unfollowed you. This tool also has a premium version that gives users added information which is otherwise not available in the free version.
A free service is likely to get more visitors and users than a paid one. By offering free services brands can uplift their brand image and promote them. Once a business has created a brand name and image for itself and carved out a niche, it can then opt to convert into a paid version. For example- Woorank, the tool that lets you check various metrics of your site was initially a free tool. However, once it created a niche, it became a paid tool. This is evidence enough that offering free services can help to grow a business.
Disadvantages of offering free services
While ‘freemium’ services are liked by all, keeping up with providing the free service can prove to be costly for a company. While offering free service can be favourable for audience, it can be price sensitive for the company. If a company continues to provide free services, it will not be able to survive in the competitive market for long. Financial backup is necessary for any company to run. For startups it becomes really difficult to survive if it continues to provide free services for an extended period of time.
Offering free services is a positive element that is widely used for promotion and marketing of products. This is one of the best branding strategies for launching a new products. If you feel that you have an audience who will multiply if a free service is offered, you can go ahead and try this technique for product awareness. However, make sure you have ample backup to continue with the free services for sometime.