Tech predictions 2009: Dead of the money making core product

Selling your product for money is a very normal business model. If you make a product it will cost you some money and to make a profit you’ll ask more money for the product than you spend on manufacturing it. The same goes for services you offer. However your product is very seldom unique and if you are selling a not unique quite homogeneous product, you should not ask money for it. You should offer it for free to your customer.

Selling value

Customers will not buy your product or your service since it is 2 euro’s less expensive, customers buy your products since ancillary products and services add value to your product. Therefore let customers pay for the ancillary product and not for the core product itself. Also there are more ancillary products to think of than core products, so perhaps you could even earn more money with those products than with your core products (seems to be something like The Long Tail again).

No revolution

This is not a revolutionary business model: Ryanair offered som of their flights for free (or very low prices) and they are planning to earn money completely based on ancillary products (which already was not quite new, since KLM used to have some money in the Hilton Hotels). Zappos (online shoestore) has a brilliant story around it that someone phoned them asking where they could order a pizza and the employee of Zappos provided them with five numbers they could order pizza from (not an ancillary product though, however very good for Zappos reputation). And the newly launched service Rypple (which is for free) does offer an awfull lot of service and direct interaction concerning their service. When I used it the first day I already got some extra followers on Twitter and a good mail conversion with David Priemer from Rypple about the service and its possible improvements.

Your core product will be your lead to sell the ancillary services and products that make the real money and gain marketshare.

Published by rick

I solve digital problems.