Why are there so many FREE digital tools?

It’s incredible how many free digital goodies you can find nowadays. In fact, you can build many aspects of your business using free tools — from idea generation to invoicing, website design to customer validation. You can find stock photography, fonts, mobile app makers, video makers, file storage and photo editors all for the price of free. Why is anyone taking the time to create and maintain free stuff? Here are eight reasons.

1. Attract online traffic. 

Let’s say you’re a marketing agency and you want more site traffic. One of the ways is to create free (ideally relevant) tools on your website. In the case of a marketing agency, the free tools could be banner ad makers, SEO tools, stock photography, etc. Since there are already so many free tools on the market, they have to develop something unique in order to succeed.

The cool thing about the tools is if it’s of good quality, directories and media sites will link to them and that’s how you get free traffic.

2. Capture relevant contact information. 

If the free tool requires registration, the aforementioned marketing agency can capture the user’s information and get in touch with them about other services. This is a great lead generation tool. If you’ve ever downloaded a free white paper, chances are that company got in touch with you at a later time. To be on the safe side of marketing laws, the agency will (or should) make it clear how they will use your email address in their policies.

3. Capture and sell your contact information. 

Chances are that at some point you signed up for something and your email address and contact information was sold to third-party companies. This is a common industry practice and the reason we have so much spam in our inboxes. MailChimp, likely the most-used email marketing software, enforces spam laws and requires all of their campaign creators to include an ‘unsubscribe’ link at the bottom of all newsletters.

4. Learn from users. 

A company can create a free simple tool and observe how users interact with it before spending money on developing more complex software. This is known as a Minimum Viable Product (MVP) which works well on a variety of software. Eric Ries, pioneer of the lean startup movement, says that an MVP “is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”

5. Advertising revenue. 

If you’ve ever downloaded a free app with lots of ad pop-ups, then you understand how this works. The banner ads embedded on the tops of websites or the pop-ups that annoy you all fit under the ‘display advertising’ umbrella. In this case, there’s definitely a trade-off between generating ad revenue and ruining the user experience.

6. In-app purchase revenue. 

Most app makers will price their products at $0, also known as the ‘freemium’ model, to encourage downloads en masse. Companies are then able to monetize their product via in-app purchases, a strategy which works particularly well in mobile games. For example, there might be in-app payments for each additional item the game is introducing (i.e. a specific weapon or level) which are usually presented to players in a bundle.

7. Capture the user long term after the trial expires.

Many companies will offer their product in a free trial, which essentially lets you go on a 30-day test drive. After the trial is over, the company then prompts the user to purchase one of their packaged options. What usually happens, especially at the enterprise level, is the user’s day-to-day operations are already fairly intertwined with the product so they’ll be happy to buy. On the consumer end, there’s some room for abuse — as anyone who has taken advantage of a monthly Netflix trial subscription would know.

8. Users will love the tool and purchase an expanded version.

Luminosity, a mobile brain game app that improves cognitive abilities, is a prime example of a company that delivers great value — to the point where users will gladly pay for an expanded version. How it works is users play a few games every day as a part of a ‘daily workout’ but only have access to a limited number. To fully stimulate the brain, users will have to unlock the premium version of the app.


By Yana Robbins

 

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