How to choose between free and premium
Image courtesy of Stuart Miles | 

I hate the term “internet marketer” (and, of course, “internet marketing”), but I don't have the appetite at all to go about changing it or calling myself something else right now, so we'll save that for another time.

But for now, let's just say that there is a rift between internet marketers; some love to give away stuff for free, others will do nothing of the kind. Is one side right, the other side wrong? Or is there a middle ground?

I believe there's something in between free versus not free and this is not an all or nothing situation. Put another way, there are some things I willingly give away and some things that I just won't give away at all.

First, the back story. As in–why the heck am I even writing about this? Here's why. I'm tired of doing a bunch of work nor naught. I have literally done tens of thousands of dollars worth of free work, for many reasons, most primarily to “get the job,” in the hopes that by doing something really cool for somebody that they'd appreciate your work and pay you for another project when the time came.

This falls under the bullshit guise of “give give give.” Now, don't get me wrong: Giving is great. But it has to be done under the right conditions. Doing laborious work for free is a really bad idea.

(There's a clue in that last sentence, by the way, for where I'm going with all this.)

Of course, whether you choose free vs. not free depends on what you're trying to accomplish. But what matters even more…I'll get to that.

For example, to build your subscriber list, you most definitely want to consider giving away something in return for their contact information. But, OBVIOUSLY, if you want to earn revenue from the “thing,” you will have to charge some money for it. Of course, you could–and should!–always build a “back end” to the “thing” but you're usually better off charging a small amount for the front-end product and a higher amount for the back-end.

Now, the important part. This is how I determine if I'm going to give something away or sell it. There are always other considerations, but this is the primary distinction:

What is the marginal cost for me to produce a clone, or copy, of the product?

Wait–what? What is this marginal cost crap? (I got my BA in economics and that's about the only thing I really remember from back in the day.)

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According to Wikipediamarginal cost is the change in the total cost that arises when the quantity produced changes by one unit. That is, it is the cost of producing one more unit of a good.

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What does this mean? Let's illustrate by way of two examples.

  • Example #1 – A software program. While the first one may cost hundreds or even thousands of dollars, the cost (marginal cost, remember) of each one after that is nearly zero – in essence, all I'm doing is making a copy of the first. If there is any physical packaging or hosting of a file online, there are tiny costs associated but the costs are pretty small, especially if all I'm doing is making a copy of a file that I host online. Then, all I have to pay for is storage and bandwidth (mere pennies, even for LOTS of downloads).
  • Example #2 – A custom paint job on a car. Each one costs me a ton of time and labor. Each paint job presents its own unique challenges, too. There's procurement of the paint, sanding and other preparation, spraying, drying, polishing and buffing, etc. Each additional paint job I do costs as much to me as the last in terms of time and effort (it varies, sure, but you get the point)

Now, in the internet marketing world, we do two things (roughly) with respect to “production”: We make products and we provide services. This is pretty much where I draw the line in terms of free versus paid. While I do sell products (i.e., “files” that are virtually free to reproduce and host), I don't feel too bad if I give some away. I may have taken a bunch of time and expended a lot of energy in getting the product ready, but my marginal cost is nearly zero. Put another way, producing the 2nd or 700th copy of a file costs me next to nothing.

On the other hand, if I build a website, while I can clone it, I do have to make it unique. This takes money and/or effort (well, somebody's effort costs money). The next website I create will take more money and time.

So, if I want to entice people to subscribe to my newsletter, I don't feel one bit bad giving them an ebook. I would NEVER give them a free website. (I shouldn't say “never” because I would if my marginal revenue exceeded my marginal cost!)

Haha! There's another economics term that I won't bother defining (you know where to go to find it any way). Basically, I'd give away a service like a website if I knew I'd make back that amount or more in terms of future revenue from that same customer. But that's a tough one to estimate with a high degree of accuracy.

So, bottom line: If it costs me nothing or next to nothing to produce a copy of something, I will consider giving it away for free. If it costs me time and/or money to produce a “copy,” then I most likely will charge for it.

Now, I know some people won't give anything away, yet some people give everything away. You have to decide where on this spectrum you want to be, given the facts that people like free stuff on the one hand but on the other they place very little value on free stuff.

It's up to you and you ought to test it out–but I'm telling you where I've arrived and why.


free versus premium

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  • In short: No one in the first group was going to spend a dime with you anyway. You lost nothing by giving them free information. Some of the people in the second group will use your information and have a go at doing the job for themselves, whilst others in the group will see that they need expert help, and some of those people will hire you. With the third group, if you demonstrate through your Content Marketing that you truly are an expert in your field, you become massively more likely to get a call from them when they need help. They already know all about you and your work. They trust you.

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