The bootstrapper in free culture

Filed in archive Bootstrapper Tips on April 9, 2008

In The Price of Free, blogger and entrepreneur Justin Miller argues that creators of software and other intellectual property must charge for their work.

I've advocated in a previous post for the need of revenue in any bootstrapping business but what is a bootstrapper to do in an emerging free culture and open source environment where free or shared resources have become more prevalent.

Benefits for giving away at least some products or services include:
• Spreading the word. Singer/songwriter Brad Turcotte has essentially proved the mainstream music industry wrong in its assumptions about the destructive effect free music on the Internet might have on profits. Turcotte promoted his music through free downloads on line asking fans to donate if they wished and made enough money on licensing to release his work in CD form. Even with the free downloads still available customers buy his work. The mainstream band radiohead, has to some extent followed part of this template more recently.
• Encouraging adoption. Software entrepreneur Greg Gianforte introduced his first product to companies by offering it free to anyone who would use it, according to an article in Inc.com. Within three months he started selling two year licenses setting his price deliberately low to jump start sales and charged customers for any additional features they asked for.
• Generating interest. Marketing guru Seth Godin argues in this post on his blog that giving away a book for free is an easy way of disseminating ideas and encouraging people to interact with you (and your business) in many other ways, a level of interaction Seth calls "the currency of the future".
• Doing the right thing. In his post, Miller too says he's given stuff away when he can and says he believes in it "if it works for the developer". A good yardstick for value when charging for an application, he says, is a price for a product that "adds at least that amount of value to [a customers] workday".

These guidelines may help a bootstrapper decide when giving away something for free makes economic sense. In the end, it's what works for your business that counts.