Free is a powerful force in the marketplace; especially online. A fast-growing, Internet-inflamed “Culture of Free” is leaving more and more businesses in all industries and areas reeling in profit pain. Companies large and small are seeking answers to a question that once seemed odd: What can you do when your products or services are more popular than ever, but consumers don’t want to pay for them anymore?
Saul Berman, author of “Not for Free: Revenue Strategies for a New World,” pinpoints areas causing the shift:
• High customer expectations for personalization, control, relevance and timeliness.
• Low cost, saturation-level communications.
• Plentiful, real-time data processing power.
• Rapid-fire technology and competitive innovation.
These trends and expectations affect even small, local businesses. Customers now instantly communicate local buying experiences; they expect restaurants, dry cleaners, health clubs and others to offer personalized, relevant offers and experiences. And they have unprecedented access to price comparison and other competitive information.
Businesses are being forced to squeeze out revenue in new ways as markets shift.
Most business owners still view customers through an outdated, mass segmentation lens based on age, income, gender or geography. That view is dead, done in by technology. In its places there’s a new type of segmentation based on how buyers actually behave – how they use your products, services and information. This sets the table for building revenue in new ways:
1) Pricing innovation: It’s not just “how much” but also “when.” No product is free – ever – notes Berman. Someone always pays for it. So the answer is not to price your product at zero, but to innovate around the amount of money charged, and the point (or points) in time when you require customers to pay.
2) Payer innovation: Sometimes the customer who pays is not the consumer of the product. Since nothing is free, and somebody always pays, the trick is to think of alternative “somebody’s” who might pick up the tab, or part of it. A classic example is TV shows. They’re free to you – the advertisers pay.
3) “Package” innovation: Don’t take “package” too literally. It’s not about the wrapper; it’s about all the benefits and features of a given product or service. Today’s most innovative companies are expanding revenue opportunities by changing the form an existing product takes. •
Dan Kehrer can be reached at editor@bizbest.com.
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
By Emilio DiSpirito IV License Partner | Engel & Völkers Oceanside Leader | The DiSpirito…
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