Thursday 25 April 2013

“There’s No Such Thing As A Free Lunch”

Is “Free” a viable business model? 

I was recently asked this by someone who runs a software business and they are introducing a new product into a well established market. They have big ambitions to “shake it up a bit” and they are thinking about all there different ways they can attract attention.

There's no such thing as a free lunchOne of the biggest challenges any business has, is deciding how to set the price of their product. This is a balancing act because if the price is too high they may not achieve the volumes hoped for. If it’s too low they could be perceived as an inferior brand or they could be making less revenue than their product is actually worth. 

Some people think “Free” was developed with the spread of the internet. Of course it’s a big factor, but it’s been used in various ways for a long time before that. Free is very widely applied to software (all social media is basically free) and knowledge-based products such as ebooks, because the only costs of production are usually time and effort. 

There are a number of scenarios where “Free” has been used successfully:-
  • Allow potential buyers to use your product for a limited period to try before they buy;
  • Provide a less functionally complete or feature rich (lite) version. If they want to do more, they pay. This is very commonly used and if the balance is right, the subscribers effectively subsidise the free users.
  • Support the free version through advertising 
  • Get sponsorship from people or organisations who want to communicate with your audience to create awareness for their cause, belief or brand; 
  • Loan a new product to a carefully chosen group of people who will write flattering reviews, which in turn will attract paying buyers;
  • Give the product to a person who has influence and is able to attract other buyers by endorsing your product;
  • Buy one, get one free, which is a way of achieving increased volume;
  • If your product has components, you can ‘give’ something away when a system is purchased. Look at how the price of printers are now so low. Often, a full set of ink cartridges cost more than the printer. How long will it be before you get a ‘free’ printer when you buy a complete pack of ink?
So, can you actually build a successful business using this as a pricing model? 

The obvious answer is no, because it’s a fundamental driver for any business to generate income. But “Free” can and does work very well for consumers. This blogging platform is free, but I need the technology to access it. I know, I could go into a public library and pay absolutely nothing, but I’m sure you get my point.

As a business, “Free” only really works when you use it as a way to drive income from other sources. And that’s the key thing to keep in mind, whatever business model you work with.

Friday 12 April 2013

Driving Growth from Two Fronts


Maximising the potential of people and optimising cost and process efficiencies drives growth and profitability

Ithaka Leadership Development and EPI International announce a strategic partnership to work together to on selected client projects.

EPI works with organisations to identify and eliminate waste, improve efficiency and reduce costs. Their software and consultancy service is called iCEO or Intelligent Cost and Efficiency Optimisation. iCEO combines EPI’s proven expertise and consulting methodology in an innovative software platform called CEOportal. This was developed in collaboration with Warwick University and it has achieved impressive results. For example Computer 2000 saved more than £1.3 million, dabs.com £500,000 and TNT Logistics more than £180,000.
The EPI team consists of vastly experienced business improvement consultants with many years global experience working at IBM, AT&T and Profit Focus Group. They also have a strong track record in Finance, Supply Chain, Manufacturing, Retail and the Public Sector.

Managing Director Peter Sturrock said “We like the EPI approach because it’s based on decades of proven experience and we feel it will add significant value to our clients.  Because it’s a holistic process, iCEO considers business process efficiencies and cost reduction strategies as part of an overall programme of continuous business improvement. This has many parallels with the Ithaka model and we share similar values on how to drive and sustain improvements in an organisation.”


 Ithaka has a unique approach to developing excellence in organisational leadership, management, sales and marketing. Their Leadership Development Model is based on decades of experience, and it defines the best practice processes and strategies that deliver  exceptional results. Ithaka provides coaching and training to clients across all sectors.  Their key programmes are ‘Leading a Business Through Growth” and “Drive Sales Growth”. This is complemented by “The Leaders Forum” a group for Managing and Senior Directors to share experiences, ideas and resolve issues in a confidential environment. 

EPI Managing Director Nick Close said “Ithaka has a very impressive track record. Their work on leading a business through growth and their holistic approach to sales and marketing development is unique. The fact that they are also approved coaches under the GrowthAccelerator* scheme makes their services even more attractive to some of our clients and we look forward to developing this partnership.”

More information:

(* GrowthAccelerator is a scheme that offers matched funding for management training and coaching to organisations in England who employ fewer than 250 people and have a turnover less than £40m)