Chip Shots by Chip Griffin

If You Won’t Pay for It, Is It Valuable?

If you wouldn’t pay for a service, does it have real value to you?

That’s the question I often have for those who roundly embrace free services, but balk at the notion of paying any amount for it.

This afternoon, I posed a version of that question to prominent marketing consultant and LinkedIn advocate, Chuck Hester. I consider Chuck a friend and welcome the chance to see him once or twice a year at various events. It’s always good conversation. Moreover, I deeply respect his knowledge of LinkedIn. His expertise has helped countless people get more out of this business networking service.

In a Blog Talk Radio interview with Chris Heuer of the Social Media Club (and fellow American University alum), Chuck was asked about paying for premium LinkedIn services. Chuck said he had never paid for any of the LinkedIn upgrades and was quite happy with the free service.

That prompted me to inquire via the chat feature whether he would pay for the now-free level of service and, if so, how much. The answer? Probably nothing. Chuck specifically pointed to the $99 annual cost for the Personal Plus service that LinkedIn offers and said that would be too much for his personal needs.

However, in a follow-up email conversation, Chuck told me that, “As a LinkedIn consultant, I need to keep up on all the features of the service.  I do believe there is value in the paid model for some of my potential clients. Therefore I would pay something to keep up with best practices of the site and to be as knowledgeable as possible.”

Nevertheless, I think the “free” point of view is one that is widely held among a lot of consumers when it comes to web-based services. And, to me, it’s a troubling one.

If a service like LinkedIn that Chuck so strongly advocates would not be worth $8 a month (or to put it in TV charity terms – about 35 cents a day) for his personal use, is it really that valuable? If someone isn’t actually getting 35 cents a day of value out of LinkedIn, then why spend time using it? Obviously, Chuck’s case is unique because he’s advising others – who may not have the sort of extensive network and experience that he has built over the years – and their needs may be different.

I have spent considerable time talking about my concerns about the notion of content wanting to be free and what it means for quality media. But the threat posed by the idea of web services wanting to be free is no less disconcerting.

The reluctance to pay money for compelling web services poses a long-term threat to Internet innovation. It is simply unreasonable to expect that advertising can support all or even most web services at a level that makes them rewarding for entrepreneurs to develop and businesses to sustain.

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One Comment

  1. I’ve been doing a lot of reading on pricing lately, and the sad fact is that most buyers do not do an analysis of the benefit they are going to get vs. the cash outlay. Instead there’s an amount that’s been “anchored” in their mind as to what it should cost. Unfortunately because of how the internet economy began, most people have an arbitrary baseline of free for everything.

    Some studies show that setting this anchor is worse than random, it can be influenced by a lot of things. One study showed that by having people think of their social security number before pricing an item caused them to set a higher price…

    Worse, I’ve read a number of cases where there is no way to dig out of this hole once you are in it. Only by breaking the model with something new do you have a chance.

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