value

Storage per GigaByte is trending to zero. At the start of 2011 Mozy went from unlimited to limited backup and increased its price.

News on the web is free. Two months ago the New York Times started to charge as much as $420/year for digital access.

Google's bandwidth costs are near-zero; so is its computational force. Today Google announced it is dropping 11 developer API's.

Twitter is free to build on. This week Twitter will announce its own photo sharing service, cutting services like TwitPic and yFrog off at the legs. And that's after telling developers to do what Twitter does; after Twitter buys Tweetdeck, the most popular Twitter client. And it's before buying advertising firm Adgrok.

Each of these players has their own reasons " from creating a profit line to increasing focused attention –  for limiting the unlimited, raising the price from free to paid and from paid to premium. But taken together they state:

Free Lunch Is Sooo Outdated

Not over in actual presence; of course not. The freemium model won't go away for a while.

But the idea of building a product, providing a service, and charging money for it, is back on the 'net in an exciting, proud way.

The pride of making money with a product is not through creating scarcity by charging for it; it is in creating value by charging for it.

Setting a price on a product creates expectancy and increases Customer Perceived Value (CPV) through price anchoring.

Free isn't cool. Free isn't premium. Free isn't perceived value. Free is nothing.

Cars, airlines, music players, shoes " you name it, there are premium brands and there are commodity brands. On the web, commodity = free. Thats just how the game is played.

– "Freetards ruining the web?", Don MacAskill, SmugMug's Co-Founder, CEO

Make It. Sell It. Do It.

"The More You Ask For, The More You Get" shows how this business model is a win-win one.

Go: make money.

Ruud Hein

My paid passion at Search Engine People sees me applying my passions and knowledge to a wide array of problems, ones I usually experience as challenges. People who know me know I love coffee.

Ruud Hein

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2 Responses to “Putting Value On Value: What Mozy, Twitter & the NYT Have In Common”

  1. I think paying for premium products are right. Giving a minimum for free, and reserving som premium features for paying members are a good business model in my opinion. By having the basics free, people gets to try the services before they decide to pay. I don't like the time limited free service that much, because it can Bea lot of annoying advertising if you decide not to use the services.. I think that it's good news for bloggers that newspapers choose a paying model. This can lead to more blog readers, and maybe better online news for the paying members.

    • Ruud Hein says:

      Thanks for the comment, Bjorn.

      Freemium can be made to work. What's interesting is that simple straight forward premium often seems to work much better. Flickr does so-so; SmugMug is a huge financial success.

      Perhaps it depends on the industry?