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COMPETING AGAINST FREE

Discover effective strategies for businesses to thrive in a market where free products pose a threat. Explore tried and true methods such as up-selling, cross-selling, charging third parties, and bundling. Rethink profit centers and redefine product offerings.

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COMPETING AGAINST FREE

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  1. COMPETING AGAINST FREE Robbie Sander Erik Anderson

  2. INTRODUCTION • What are some of the best free products you have used recently? • Do you believe it was a better product offering than something you could have paid for?

  3. ASSESSING THE THREAT • Three factors • Ability to cover costs • Skype • growth rate- 40% • rate of defection- 5%

  4. Choosing Whether and When to Respond

  5. Offer a Better Free • When? • How? • Failure to respond... • The saga of Yahoo vs. Gmail

  6. Four Tried and True Strategies • Up-Sell • Offer a free product, then charge for a premium product Example: Phone apps • Cross Sell • Sell products that are not directly tied to the free product Example: Ryanair • Charge Third Parties • Provide a free product and then charge a third party for access Example:Google • Bundle • Offer a free product or service with a paid offering Example:HP- Buy a PC get a Printer

  7. Rethink Profit Centers • First Obstacle: Products are viewed as the profit center • Second Obstacle: Accountability structured to focus on products as a profit center.

  8. Questions • As a college age consumer, what characteristics are necessary for you in a product to justify spending money on it?

  9. Article Link http://classes.bus.oregonstate.edu/ba499/elton/Articles/Competing%20against%20Free.pdf

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