How to make money with free services

A business model that VC* adores. Business 2.0 has published a series of advices to make money offering free services. Which is the strategy? The “Freemiums”services. That is to say, services 100 % free that attract users to a basic product, to offer then a special product, with a respective payment.

Examples of this strategy success are many, the Magazine mentions, between others, two examples: Adobe, which started by giving their PDF reader in 1995; and MySQL, the second company in open-source database software, that also offers it for free.

These are nine advices to begin your “Freemium” business:

1. Have a product or service that truly stands out.

2. Have your freemiums upselling plan ready from the beginning.

3. Once you’ve decided that a product will be given away for free, don’t change your mind.

4. Access to your product should be just one click away.

5. Make sure the major bugs have been exterminated.

6. Harness the collective intelligence of your users.

7. Keep improving the product to give users more reasons to stick with it.

8. Identify a range of revenue sources. For example, MySQL makes money from customer service and charged to firms that redistribute the software.

9. Timing is everything. Make sure that revenue from your extra service soon covers the cost of your free service.

* Venture Capital: Money invested by a group of investors on a project or business of high risk.

Source: A business model VCs love