Free as an economic model has been around for a long time. Radio and TV use it, and free seminars often entice people to walk into a captive selling environment. Ever been on vacation and taken the free night at your hotel in exchange for a timeshare pitch? “Honey, we’re going to sit through the presentation to get our free night, but there’s NO WAY we’re buying a timeshare.” A week later, you own one. 

And in this digital age, most of the top websites are free: Google, Facebook, Yahoo, YouTube, Wikipedia, Skype and blogs. 

This past weekend Chris Anderson, author of the Long Tail, covered the strategy of giving things away for free as a business model. It’s a preview to his upcoming book. As Mr. Anderson explains 

“Gratis can be a good business. How? The majority of customers who pay subsidize the majority of those who do not. Sometimes that’s two different sets of customers, as in the traditional media model … The last decade has seen the extension of this ‘two-sided market’ model far beyond media, and today it is the revenue engine for all of the biggest Web companies.”

Freemium is the new model on the web, which delivers a free version for “light” users, with a full feature set for paying customers. This new model is stronger than many of the ad-based free models (does anybody really click on those Facebook ads?), but geared toward online services.

So how can business consultants use the power of free? 

Carefully. 

When you sell your time and expertise, you can’t afford to give away too much value–you have a limited amount of each. You can even devalue your offering by giving away free services and advice. It’s very different from a free product, and the reasoning is rooted in human psychology–the perception that if someone is willing to work for free, their work must not be of great value. 

What to give away 

On the flip side, “free” can still help you build your brand, generate leads and win deals. Better yet, if you deliver something free over the internet, your marginal cost is almost zero and people can find it forever. The key is to make sure that your free offering 

• Delivers value;
• Shows professionalism;
• Displays expertise;
• Can be delivered in economies of scale; and
• Doesn’t “devalue” your offering.

What should you give away for free? The internet makes digital content the obvious choice: articles, papers, videos, blog posts, ebooks or tools (calculators, worksheets, questionnaires) that help potential clients assess or evaluate a part of their business that you can improve. Think of it as using the freemium approach, and make it easy for your fans to connect with you so you can convert them into clients.

What not to give away

Here are things that you shouldn’t give away for free:

• Mini/trial engagements. If the company won’t pay, find one that will.
• Complete recommendations for client problems. This can work in certain situations, when your prospects know that they can’t execute your recommendations. But beware of the ones that are just fishing for answers.
• A stand alone offering that doesn’t entice the recipient to want more. If they can take it and do it alone, many companies will never start a conversation. 
• An overabundance of time trying to win an engagement. Take your potential clients through your selling process, ask for the business, identify and overcome objections, ask again, then move on. Don’t waste precious time with people that won’t engage.

Done correctly, free as an economic model can allow you to pick and choose your clients, grow your practice by adding more consultants and increase your fees.

And if your clients need to start distributing digital content over the web, check out a few links to help you implement the long tail.

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• Chris Anderson at The Wired Store, NYC. What is new about Free? (webmetricsguru.com)
• The Facts Behind Giving Things Away (killerblog.com)