Weighing the Value of "Free"

Question: Where do you see free playing into the business model?

Jason Fried:  Free\r\n is fine.  So we have some free stuff.  We have free versions of all of \r\nour products.  We have a couple of free products.  We gave away one of \r\nour books for free.  But, we also charge for stuff.  And we charge for \r\nsome of the things that we also give away for free.  So you have to be \r\ncareful not to give away too much.  We like to liken it to emulating \r\ndrug dealers, basically.  So, drug dealers give people a little taste, \r\nthey get them hooked and then people buy more.  And, you know, I hope \r\nour products are as addictive as crack.  They may not be, but I hope \r\nthey are.  But the idea is that, that model works really well.  And so \r\nour products, you can try them for free.  You can try them as long as \r\nyou want for free.  And then if you need some more of our products, more\r\n features or more capacity, then you can pay for them.  The problem I \r\nhave is when companies, like their business model is free only, and then\r\n they say, "We’ll figure out how to make money later."  As if there’s \r\ngoing to be this magic switch they can flip.  And it gets back to one of\r\n these original things I was talking about that if you’re not practicing\r\n making money, you’re not going to be able to flip that switch and just \r\nknow how to do it really well, you need to have some time.  You need to \r\nhave some experience at making money.  And so, free is like... Ruby on \r\nRails, we open sourced. So that’s free.  That’s a framework that anyone \r\ncan use to develop products.  And the reason we did that was because we \r\nthink infrastructure in general should be free.  A lot of the things we \r\nbase our products, our infrastructure on are free.  You know, my XQL are\r\n for database, you know different free servers and Ruby’s an open \r\nlanguage that's open.  There’s a lot of open source that we depend on to\r\n build our products and we wanted to give back that as well. So, that \r\nwas really important to us.  And even more so, we knew Rails would get \r\nbetter if hundreds or thousands of people were using it and contributing\r\n back to it than if we held it to ourselves and had to make all the \r\nimprovements on our own because that wasn’t our core competency.  We’re \r\nfocused on products.  Not our infrastructure.  So by open sourcing our \r\ninfrastructure, other people can make it better for us and make it \r\nbetter for them.  And I think that’s a really valuable way to do it.

Recorded on July 22, 2010
Interviewed by Peter Hopkins

When companies have a "free only" business model—thinking they'll make money later—they're usually betting that "there’s going to be this magic switch they can flip."

Related Articles
Playlists
Keep reading Show less

Five foods that increase your psychological well-being

These five main food groups are important for your brain's health and likely to boost the production of feel-good chemicals.

Mind & Brain

We all know eating “healthy” food is good for our physical health and can decrease our risk of developing diabetes, cancer, obesity and heart disease. What is not as well known is that eating healthy food is also good for our mental health and can decrease our risk of depression and anxiety.

Keep reading Show less

For the 99%, the lines are getting blurry

Infographics show the classes and anxieties in the supposedly classless U.S. economy.

What is the middle class now, anyway? (JEWEL SAMAD/AFP/Getty Images)
Politics & Current Affairs

For those of us who follow politics, we’re used to commentators referring to the President’s low approval rating as a surprise given the U.S.'s “booming” economy. This seeming disconnect, however, should really prompt us to reconsider the measurements by which we assess the health of an economy. With a robust U.S. stock market and GDP and low unemployment figures, it’s easy to see why some think all is well. But looking at real U.S. wages, which have remained stagnant—and have, thus, in effect gone down given rising costs from inflation—a very different picture emerges. For the 1%, the economy is booming. For the rest of us, it’s hard to even know where we stand. A recent study by Porch (a home-improvement company) of blue-collar vs. white-collar workers shows how traditional categories are becoming less distinct—the study references "new-collar" workers, who require technical certifications but not college degrees. And a set of recent infographics from CreditLoan capturing the thoughts of America’s middle class as defined by the Pew Research Center shows how confused we are.

Keep reading Show less