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Should Your Services be Free?

It's a provocative question to be sure, but one that you may have to face sooner than you imagine. I've just finished reading Chris Anderson's new book Free:The Future of a Radical Price. Chris Anderson is the editor of Wired magazine and the author of another very influential best seller The Long Tail about the market potential of very niche products in the internet age.

In Free, Anderson argues that the rapidly falling cost of internet based products and services is having a major impact on business models in general and pricing in particular. While this is easy to see in the world of search or data storage, how does “free” impact professional services? By my reading, there are two key impacts.

First, “information wants to be free,” as Anderson aptly observes. What once was knowledge “closely held” by professionals is now a Google search away. From health care to technology, the information barriers are coming down.

Second, professional services is becoming more automated. Many tasks once performed by professionals are now available in self-service form. From crowd sourcing to online services, there are rapidly emerging alternatives to traditional professional services.

So where does this leave the professional services firm? Well, with threats come opportunities. The same forces that are eroding the knowledge gap are providing firms new opportunities to become thought leaders and reach a global audience. A single partner with passion and a keyboard can build a global following. By making information widely available (i.e., free), a firm can quickly build its reputation and visibility. And those traits, my friends, are the basis of a formidable brand.

The automation of services can also be a blessing for your firm. Automation can allow you to service clients on a scale never before possible — with unparalleled consistency in quality.

This brings me back to the pricing model. According to one traditional school of thought, a professional should never give away his or her services. This would dilute the value of a professional's services. The opposing school of thought argues that by giving away a limited amount of information and services you demonstrate your expertise and build visibility and trust. Anderson's thesis would clearly support the latter. Where do you stand?

 

Author: Lee Frederiksen, Ph.D. Who wears the boots in our office? That would be Lee, our managing partner, who suits up in a pair of cowboy boots every day and drives strategy and research for our clients. With a Ph.D. in behavioral psychology, Lee is a former researcher and tenured professor at Virginia Tech, where he became a national authority on organizational behavior management and marketing. He left academia to start up and run three high-growth companies, including an $80 million runaway success story.

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