Let’s ignore the grammar and focus on the message of this comment:
Strong competitors, this is the reason number one, why to release your stuff for free.
I figured this was going to be one of the arguments brought up as to why you release your products/services for free. It is basic Business 101 that if you want to beat everyone else you just do things for free right? Why is it that the Web 2.0 industry seems to be the only industry with this type of mentality? I definitely don’t think you need to go to business school to run a business, but it shows that many of us don’t take the time to think about the ramifications of doing everything for free.
I’m sure more than a couple of you know (or maybe you are one yourself) new designers entering the freelance market. What’s their idea of gaining clients quickly? Either offer the wonderful design services at ridiculously low prices (we are talking $200 websites here) or simply give them away for free with the condition of getting a link back to their site in the footer. You know how this story usually ends. You get an unhappy designer who feels that there is no money to be made doing what he loves to do all because he sold himself out.
You know what is really sad though? There are worse designers out there charging way more than him and getting away with it so it really has nothing to do with price when it comes to being successful.
Now being a fast food connoisseur I wanted to look at this industry to see what would happen if we applied some Web 2.0 logic to it. This industry is very cut throat with prices always being low, yet you never see them drop to free. If McDonalds were to go the Web 2.0 route everything on the menu would either be free or under a dollar with a huge ad slapped on the packaging. Or maybe they fill your bag with more junk than your mailbox just to push some burgers into your lap. Hell, it makes sense to me and they have to do this because of strong competition from Burger King and Wendy’s.
In reality they don’t do this though because they have costs that must be handled. They have to pay for the food and I am sure their employees would like to take home a paycheck and because of this they charge for their food. In the Web 2.0 world the same costs apply. We have to pay for hardware and since our time is money just like it is everywhere else we have to pay for the people who work with us. However, we still feel that the only way to do things is to give them away for free and just slap some ads on them because of strong competition.
If your strong competition is beating your product head-to-head it probably isn’t because of price. There are cheaper options to Flick’s Pro Version yet people don’t seem to mind throwing down the dollars. Let’s not even bother looking at how 37signals doesn’t seem to be struggling. The point is when it comes to your competition if the only thing separating you from them is price then you will always be in trouble.
Originally posted on March 1, 2007 @ 1:18 pm