Over the past 4 years my business has changed out of all recognition. The reason for that change is open source software and free (or near free) resources that can be found and leveraged on the Internet.
I teach WordPress classes around the country and am expanding my class material to include eCommerce and CRM (Customer Relationship Management) Cloud Solutions. I market my services on WordPress Blogs, Google Plus, Facebook, Twitter and Biznik. The tools I use are free and the social media and networking sites are also free (or have levels of free membership).
- WordPress is Open Source and Free to anyone that wants to use it, and yet it’s one of the most powerful development environments on the planet.
- WP eCommerce is a massively powerful eCommerce Plugin for WordPress; which turns WordPress into a fully fledged, Enterprise Standard online shopping system. And WP eCommerce is free.
- vTiger CRM is the best cloud based CRM system I have come across. It is powerful, intuitive, highly customizable, multi user and free.
- Services like Google Mail, Yahoo, Hotmail, Facebook, Google Plus are all free to the users of those services.
The Paradigm has truly Shifted and I changed my business model to reflect the shift.
As I am often standing in front of a class talking about open source and free websites, free plugins and utilities, I’m frequently asked “how on Earth does anyone make money when they give everything away for free?”
In my view, Microsoft is in many ways responsible for this phenomenon. When Microsoft started piling additional ‘products’ into the Windows operating system; like a free Browser (Internet Explorer), Media Player, Networking, Email Client, and countless other utilities (effectively putting many competing products out of business) they forced the competition into a new way of thinking. While Microsoft was making billions, everyone else was marginalized and sidelined. The only way to compete with Microsoft was to give it away.
The Internet, the low cost of digital storage and data transmission also helped to change the way products are marketed and distributed. Anything can be sold or offered on the Internet as virtual shelf space approaches the infinite. Where once upon a time your choices were restricted to what was available on the shelves of your local store, Walmart or the mail order catalogue, now you can find just about anything simply by going on line and searching.
The digital marketing phenomenon has led to an explosion of ‘mom and pop’ international businesses. This is at the heart of ‘The Long Tail’ where traditional businesses, Walmart, Sears, Kroger occupy the Body and Amazon, Rhapsody, eBay, iTunes and all the millions of niche businesses (read web based) occupy the Long Tail. Because anyone can get a shot at the global market just by getting online, the Long Tail (or infinite tail) has become the largest market place.
Although you don’t necessarily see it, open source software (free software) powers much of the Internet. A huge percentage of websites (from the server side) run on Linux / Apache (open source) and many of the eCommerce systems and database sites are powered by MySQL (open source).
No one pays for a browser nowadays as the developers are almost falling over themselves to provide the latest and greatest for free. Mozilla Firefox, Google Chrome, Safari, Opera and of course Internet Explorer. But giving products away on such a massive scale (the Internet has billions of users) has many benefits (market share, influence, kudos, goodwill) and relatively low costs (other than for the initial development).
Over the past 5 or 6 years Apple have come to dominate the Music Distribution Market with iTunes, the Music Player Market with the iPod and the Smartphone market with the iPhone. They are now the largest technology company in the world. So how do you compete with Apple?
You open up the market with Open Source software which allows a lot of companies to dive in with great products and a high quality standard operating system, and by that I mean Android.
Android is ubiquitous; it’s on Tablet Computers, Smartphones, eBook readers (Nook Color and Kindle Fire) and new gadgets every day. The Android O/S is open source and free. It is both a tech enthusiast’s and global tech company’s dream because it costs nothing and the code is open. Anyone who has the inclination can get involved. The result? Android devices now outsell Apple devices.
So we have an abundance of free stuff just waiting to be used. The trick is to learn how to use it and then make it easily available.
I have grasped this treasure trove of opportunity and have become very proficient with WordPress, WP eCommerce and vTiger CRM but as they are all free anyway, I don’t charge anything for them. I do use them and I make it very easy for other people to use them too.
The organizations behind offering free products have different philosophies or methodologies in Monetizing Free. Many free products and services rely on donations. If you found the product useful you are invited to donate a few dollars (but there is no obligation). Every year Wikipedia invites visitors to donate towards the running costs of that site. vTiger CRM offers low cost hosting or subscription plans but you can also download and host vTiger yourself for free.
It all comes down to numbers. The larger the user or visitor base the smaller the requirement for widespread payments.
As the cost to host each visitor becomes negligible so the percentage of premium paying visitors required to fund the enterprise becomes smaller.
Many free membership sites rely of subtle (or not no subtle) advertising. Facebook now has over 800 million members. Its tag line is ‘It’s free and always will be’… but not to advertisers. By offering a free service but charging for highly focused advertising, they are bringing in over $3 billion in revenue.
I have adopted the open source philosophy for my business. If it doesn’t cost me anything then I won’t charge for it or if the cost becomes negligible, I can offer that service for free. The benefits in goodwill and added value more than make up for the costs I incur.
I make my money in developing websites, installing and configuring CRM systems, teaching and consulting. I have completely stopped selling commercial products because for the most part, the free stuff is just as good if not better.
Nowadays there are free alternatives to just about every commercial product. For every PhotoShop there’s an Open Source GIMP, for every SalesForce.com there’s a vTiger CRM.
In truth, the giving something away for free extends well beyond online or digital. For years Microsoft have sold the xBox 360 for less than cost of making it, the Kindle Fire loses money on every sale, printers sell for less than the cost of the replacement ink. The purpose of the giveaway is to gain market share and make money off ancillary services. xBox with games and digital subscriptions, Kindle Fire with books and magazine subscriptions, printers with replacement ink. It’s a system that works although there are consequences. I have 5 printers; 3 without ink :/
Becoming highly proficient in something adds huge value to that something and to you. Everyone likes the price point of free and if you can leverage free, you’re already well ahead of the game.