How do you make money by giving something away for free? with Ian Makgill

8/20/2019 How do you make money by giving something away for free? with Ian Makgill

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@ianmakgill @spendnetwork

Spend Network .... ....Making sense of the world’s spending data

How to make money when

you give something awayfor free.


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Objectives:

1. Understanding value

2. How free business models work

3. Explore four different business models

4. Develop your own business model using existing d


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“Information wants to be

Stewart Brand, 1984


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“On the one hand information wants to be expe

because it's so valuable. The right information in place just changes your life. On the other ha

information wants to be free, because the cost of g

out is getting lower and lower all the time. So yo

these two fighting against each other.”

Stewart Brand, 1984


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Value:

When information can help someone…

•meet their goals;

•empower their work;

•or change their outlook;

then it has value. Once it has value, you can charge.


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Value:

Q: When does information gain value?

A: Depends on the user’s view of what is value


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Value:

People pay for answers to questions.

Description Value

Data Raw data feeds Data quality, timeli

Information Processed data Quality, ease of acc

Insight Research Relevance to user

Intelligence Specific to user Pedigree of researc


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Creating value:

How can we generate value for clients?

Actions

Data Aggregation, cleansing, linking, publ

Information Publish data that can be searched / q

Insight Regular market reports, articles.

Intelligence Analysis specific to a client.


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Examples of data value creation:

What are other firms doing to create value?

Actions

Data Met Office, Open Corporates, Spend N

Information Experian.

Insight Gartner etc.

Intelligence Consultancies, Kroll


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A look at four free business models

•Free as a marketing tool;

•free depending identity;

•freemium, free for basic, charge for premium;

•and free products that bind you into an ecosystem.


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Free as a marketing tool:

Characteristics:

•Requires a secondary product to sell (e.g. consultin

Pros:

•No complexity around limiting data access

• You are ultra competitive compared to rivals.

•The model can be scaled easily.


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Cons:

• Your second option has to have a value offering.

•It is is expensive to set up and maintain.

•Two stage sale; you have to sell the free option and

the cost option.


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Examples:

•Spend Network

•E&Y: Item Club


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Free depending on identity:

Characteristics:

•Access to the product is free if you’re from a partic

e.g. charities, education etc:

Pros:

• A one-step sale.

• You are selling data, not services, so infinitely scala

•You can determine who accesses the data.


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Cons:

• Very hard to provide as a insight / intelligence sale

• You have to establish a regulated access point

•You have to establish rights over the data

•It can be hard to get the tension between free / valu


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Examples:

•Open Corporates

•Membership orgs: Federation of small businesses

•Educational access to services

•EduBase


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Freemium

Characteristics:

•Basic services / functionality are free, premium ser

functionality comes at a price.

Pros:

•If free offering is good, it is can disrupt competitors

•Selling data product means that it is infinitely scala

•Clear distinction between free / cost


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Freemium

Cons:

•Free product has to be attractive.

•Competitors could compete by freeing up same data

•Low conversion rates mean will mean you need a m

market


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Freemium

Examples:

•LinkedIn

•Dropbox

•FloodWatch

•Ordinance Survey


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Free, but binds you into an ecosyste

Characteristics:

•Access to ensures that customers are bound to you

revenue stream comes through secondary sales.

Pros:

•Is very sticky, successful products create very high

• Wide range of secondary revenue options.

•If product is digital, it is infinitely scalable.


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Cons:

•Considerable start-up cost, offering has to be comp

•Suitable for mass markets, as small usage limits se

market.

•Requires more than data to make it work.


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Examples:

•Operating systems: Ubuntu, iOS, OSX, Android

•Office software: Google Apps

•Databases: PostgreSQL

•Dunn & Bradstreet


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Exercise:

Working in groups, create a product offering.

Must have:

1. A free element

2. Use some form of open data

3. Details what you provide on data > intelligence sca

4. A revenue model

5. Clear description of how free access is delivered


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Data > intelligence scale:

People pay for answers to questions.

Description Value

Data Raw data feeds Data quality, timeli

Information Processed data Quality, ease of acc

Insight Research Relevance to user

Intelligence Specific to user Pedigree of researc


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Recap:

1. Build value by making people’s lives easier

2. Understand where you are on data - intelligence sc

3. Understand that digital content can scale infinitely

4. More specific to people’s needs has higher value

5. Understand four business models: Marketing, iden

freemium, eco-system.


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“Information wants to be

Stewart Brand, 1984


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Spend Network .... ....Making sense of the world’s spending data

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How do you make money by giving something away for free? with Ian Makgill