In an otherwise thinly veiled infomercial, a LinkedIn Influencer, recently wrote this, in part:*
A new 10,000-developer survey by Developer Economics says that 50 percent of iOS developers and 47 percent of Android developers are “below the app poverty line” and making less than $500 per app per month. That means “the majority of app businesses are not sustainable at current revenue levels” … Developers are confusing “customer” and “free user”. A free user is not a customer … If you have a product that customers don’t want to pay for, but they want to use for free, then you don’t have a business. It’s a charity.
We’ve seen many companies bury themselves in the myriad development, maintenance, and customer-support costs associated with applications for which they charge nothing. An ironic corollary is the fact that, in most instances, the customers who pay the least expect the most. That’s a situation that’s neither winnable nor sustainable.
On the other hand, many companies have leveraged the gateway drug effect — by which free users are sold a paid product after trying a limited version — or the razor/blade model — in which the razor is given away or all but given away with the strategic intent of recouping costs and realizing a profit on selling the blades made specifically and only for that razor. The operative term in that last, long sentence is strategic.
If giving something away is part of a gateway drug or razor/blade strategy, then that strategy will include a marketing plan and a corresponding sales plan to generate the revenue to defray the costs of development, maintenance, and customer support — and to achieve the desired margins. On the other hand, maybe you’re running an entirely volunteer business.
If you are, some of the new designs for Candy Striper uniforms are really cute.
If you’ve used the free approach, was it successful? If so, how did you make it work? If not, what did you learn? Please share your story with us in the Comment box below.
* This citation is from “Entrepreneur Dysfunctions in Cartoons: Obsession with FREE”, by Sramana Mitra. We in no way support, endorse, or espouse the content of her post or the business she promotes therein.
— By User:Cburnett User:Cburnett [GFDL (www.gnu.org/copyleft/fdl.html)], via Wikimedia Commons