The Internet is seen as synonym for free by a lot of people. A lot of information or services are free. As the author of www.freestuff.co.za I get frequently asked how do these websites/companies survive. Surely they must have cost and salaries to pay.

Today I’ll try to shed some light on the issue of free and how some websites/companies make money or not.  

Some information websites are not driven by profit or even to cover cost. They are either websites maintained by persons passionate about a certain subject or hobby, or for example government portals etc. Some people are quite happy to just cover some of there hosting cost by maybe some advertising like adsense or other programs. 

The other type of website are the ones which the ultimate aim of breaking even or even make a profit, but their main service is FREE. But here is the question posed how can they make money in the end ?  

One way of generating income is advertising space on your web page. If there is enough traffic to a website this can generate quite a bit of revenue. 

The second one is offering a free basic service with paid for extras if you would need or like these. If for example you offer a free invoicing service, the basic service can be free and if you want printable invoices in pdf format you will have to pay for that extra option. The majority of the users will be happy and satisfied by the free offering while maybe 10% needs the extra offering and is prepared to pay for it. The way to lure them is first to get them to use the free product and then sell the addon. The same can be done with information type of sites, where you have a good collection of free information but if you need more you can buy a subscription to the website to access the other information.

The third way of monetising a site is by cross selling , where the free site is a means for you to get people to buy your main product or service on maybe another website. This for example can be a blog about real estate in a certain area which is maintained by a real estate agent.

Any hybrid combination of the three mentioned options is also possible. You can have a subscription service with ads on the site as well.

Sometimes there are sites where there is no obvious business model. They don’t cross sell, they don’t have advertising and there are no premium services you can buy. These sites if they become popular are backed normally by venture capital and in the future they might still be working out the right business model based on their offerings. So advertising may be placed on those sites at a later stage or subscription services might be added etc. But their current model is to grow the user base and get them hooked to whatever service is being offered.

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Article by www.freestuff.co.za a popular freestuff website

Article Source: ArticlesBase.com – The business model of FREE

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