When Free Makes You More Money
from the how-it-all-works dept
Way back when WiFi was first becoming popular and all these businesses came out with plans to charge people monthly subscription rates or huge hourly rates and somehow expected to make money, a few people pointed out that the added expense of managing all of the billing and customer support probably outweighed all of the revenue from users. It would appear that one local WiFi operator now agrees. WiFi Networking News is reporting that MetroFi has done the math and is opening up all of their hotspots for free. They note that cutting out the customer acquisition costs and billing-related costs were adding up. However, by replacing the little bit of revenue they were making from subscribers with advertising revenue from a lot more subscribers (and the lower costs), they actually end up making a lot more money. It’s not that surprising when you understand how all the factors play together, but it still seems like a good case study for those who got so angry claiming it was impossible to make money from “free.”
Comments on “When Free Makes You More Money”
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It took them some time, but they finally figured out what other companies figured out… people won’t pay for “free wireless” but won’t mind a bit of advertising to get what they want. Of course, if the advertising is too prevalent, it will turn off some users, so they will have to figure out the right balance.
It’s easy for people to equate “wireless” and “free.” Just like TV signals (omitting satellite TV for sake of argument), the over-the-air ones are free, and you pay a premium for the wired ones (more bandwidth).
Makes sense
It may also make sense to charge a fee to businesses, such as coffee shops, book stores, etc to strategically place these free hotspots near their storefronts to attract customers.
One of the reasons I don’t go to Starbucks with my laptop is because smaller coffee shops offer free internet.
Re: Makes sense
The nice thing about MetroFi is that they aren’t just doing “Hot Spot” servie. They are doing the whole city of Sunnyvale CA.
They are also doing other cities at a reate of $19.95 per month with out the ads.
I hope they make it work.
think about it starbucks
Maybe Starbucks and T-mobile will figure this out!
wel what do you...
You can make money offering a really useful free service, provided you tack on some unobtrusive adverts and charge compnaies for that…
I wonder if Google have heard of that?!!
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i used to be a t-moblie subscriber. they offer the most minutes offer but not the best service provided.