The Free vs. Paid Debate
7.26.2009 | Startup Resources
In the last year and a half since our launch, EasyAutoSales has been running our classifieds under the freemium model. The funny thing about our experiment was that we never quite figured out what to build as our premium service – so yes, the more accurate description would be: EasyAutoSales has been running a free website.
One of the main reasons we initially took this approach was because offering a free service was something I’ve never done before. The thinking was, if we built a premium product and booted all barriers to entry, a hockey stick growth would eventually happen once we build our initial group of evangelists. Well, that was partly true.
While we have received nothing but praise from dealerships that use our services, our ability to grow as a business has not shot up as fast as we would have liked mainly because our resources are limited and any attempts at paid advertising under current circumstances would result in a negative ROI. However, despite the fact that we have been successful in building our traffic, #6 in Atlanta after sites like Kudzu and Kaneva, our revenue as an ad supported free service have just been… meh.
So what does a startup do to survive? We learn. We evaluate. We change.
Our team at EasyAutoSales has been debating the pay vs. free topic for the last few months as we analyzed a number of different business models online. Unfortunately, if you only research the online debates regarding pay vs. free you will only find one answer: Pay is for suckers and FREE rules them all. That is not exactly the answer we were hoping to find.
Despite the number of voices shouting “FREE!” The truth is paid content and services are very much alive and well! On the flip side, a number of startups catering to free have crumbled simply because it no longer makes sense for them to exist in the red. (You can thank those unappreciative bastards!) Also, when you look at sites like AutoTrader vs. Craigslist, it’s pretty easy to spot that paid classifieds is doing just fine despite the choke hold that Craigslist has on every single newspaper in the country.
Speaking of Craigslist… the beacon of FREE CLASSIFIEDS and the NUMBER 1 example used in most free vs. pay debates. Craigslist is far from being free… in fact, if you live in a popular area, a number of categories on Craigslist will cost you a good chunk of change to post. So in a way, Craigslist has grown up too.
Are we being scammed by the blogosphere?
As most of us know, a startup that excites bloggers = instant guerrilla marketing. Therefore for the most part, we design services, (even pointless ones) that cater to this crowd so we can be put on a pedestal and virtual body-surf during our 15 seconds of fame. However, one must be mindful that most people who spend money online are not tech savvy, early adopters, media pirates, Twitter users, Mac users, blog commenters or bloggers. This means that if a service or newspaper wants to charge for content, even if 99% of the more vocal and opinionated people online are crying foul, chances are there will still be a huge population of willing and abled customers ready to pay for the services because they want to or because they believe in the value.
To get back on point with this post. As a free, ad supported service we’re not going to make it, at least not in this economy. Therefore, we will continue to do what we do best but we will also try to make our users see the value of our offerings and as they say in Vegas, put their money where their mouth is. Ultimately, if we’re not adding value or bringing anything to the table, it really would be better to know it sooner rather than later. Of course, if we ARE making a difference, we would love to know that sooner rather than later as well.
Related posts: