The Magic of Free

Entrepreneurs by definition are in one way or another risk takers. Most importantly you have to take the risk of bringing your product or service to market and hoping it has a compelling value proposition that customers are willing to pay for. Now what if there was a way to create demand for an initial version of your product or service, gain massive PR for free, receive massive amounts of customer feedback to aid you in creating your venture, and provide you with a positive sense of well-bring? Well there is, give it away for free!

Proponents of open source software (such as my new favorite distro of Linux: SimplyMepis) have been touting the advantages of such a strategy for years. Now I do not necessarily encourage one to permanently give away their product or service for free (unless it can be forged into a profitable operating strategy). However, while in the R&D and planning phase of any new venture I feel that it is a provocative and rarely used strategy. If you are truly confident that your new venture has a compelling solution to a problem customers face then why not give it away for free to “test the waters” and improve your new venture’s offering at the same time.

For instance, I am in the process of launching a consulting firm that focuses on individuals starting new ventures. For the month of August I will be offering completely free consulting services to residents trying to start new businesses in my home town. Not only am I positively contributing to the economic development of my town, I am also honing my skills in start-up consulting, testing demand, and “fixing the bugs” in my new venture’s strategy.

Offering a new product? Give free samples or prototypes to a small segment of your target market and test their response while gathering feedback. This is often a key component of primary market research that is skipped (and often is the most powerful).

Launching an internet venture or venture with network effects? Giving your service away for free to the first X amount of members not only increases the inherent value of your new venture, but increases traffic and creates a buzz.

Revel in the power of FREE