There have been many posts, articles and discussion on the seemingly miracle benefits of applying the “freemium” model to a business.

“Freemium” is the term people use to refer to the business model of offering a product/service/skill for free in the hope of attracting more people to your business which, should in turn, increase the amount of prospect conversions into customers.

Part of the theory goes that if you provide a free version of your product/service/skill then the user will be so impressed that they will want to pay for the non-free version of what you offer.

We ourselves offer free resources and knowledge to the business community and, on the whole, have noticed an increase in prospect conversions. “Freemium” does work but the purpose of this post is not to be another word orgy of praise at the wonders of providing free.

No, this post is more a cautionary note to business on the free model. The most vocal of us that are singing the praises of free seem to be the ones that charge a premium to talk at events or are trying to sell their books or their marketing “expertise”.

Before you offer free think about how this model will impact your business. Our own experience and those of others tell us the following could happen when offering free:

The Free or Nothing Person

You could attract the type of person that only looks for and wants free. They will never pay for anything and have been so well trained in the expectation of free by the likes of Google that any mention of up-sell will cause these types to look at you in disgust. Attracting these types would be fine if it was not for the fact that they will expect premium customer service from you and further free stuff because that’s what Google offers.

Increased Customer Support

It is logical that if you offer a product/service even for free that you should provide customer support even if it’s a basic support@ email address or a community forum.

Do you have the resources to provide support for a free product?

Remember your resources are not free. Maybe you could charge the user for support if the product is free – but ask yourself if you would pay for support using your own product/service.

Is Your Product/Service Built for Free?

For many of us what we sell is not a book or audiotape that requires no support or configuration to use.

What we sell is a product or service that requires interaction with the customer sometimes for the life of its use. For example software may require installation and on-going training. Designing a home requires many meetings and revisions with the customer and guarantees.

Make sure that what you offer for free will not cause any drain on your business. For example offering a free version of your software will firstly require that you disable some of the features that you want to provide in the paid version. The action of configuring a free version will be at cost to you and a cost that you should recoup. You may also have to provide some type of customer support – again at cost to you.

So make sure that the free version of what you offer provides enough to sell the vision but not enough to do the job well. If your free version does do the job well then why should I spend my dollars upgrading?

In summary we have found that the free model is effective for our goals however its not a massive life changing – almost religious experience as some marketers will tell you.

You need to take a good look at your business and see how much FREE will cost you and will you be able to gain profit from this exercise – because that is why you are in business – right?