Thread: Is "FREE" the ultimate nail in the coffin

Recently I made a thread Anyone have experience good/bad with outsourcing? where i mention an idea I have for a site. It's a classified ad site, but would be very different and a refreshing from whats out there.
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Problem is, my largest competitors: Craigslist, ebay (which owns 25% of craigslist), ebay classifieds, and Oodle.com are offering their services for free. I can't match that, however my idea is to offer something different, yet very very cheap. I don't want to give the idea away, but my question is to you guys, is it worth even trying?

Would people still be willing to try my unique service, even though there would be a slight fee? People are said to be creatures of habit and fear change, so i have my doubts.

You do have a lot of obstacles in your way. I think really examining your competitors (as you've already done) is key here. You have to justify why someone would come to your site and pay a fee to a new site, when they can goto CL or Kijiji and pay nothing - and those other sites are established.

I know it's hard to imagine having a business where you don't make an immediate return; however, Twitter and Facebook were free (and still are to normal people). CL is free. Many many services we use daily are free - but are valued, if that makes sense. Twitter and Facebook are free services, but if they wanted to 'sell' to another company - they would be in the billions.

I hear ya on wanting immediate returns... but realize the competition you're going up against, and realize that 'free' may be the best course of action for the first year or so.

Originally Posted by JPatterson

You do have a lot of obstacles in your way. I think really examining your competitors (as you've already done) is key here. You have to justify why someone would come to your site and pay a fee to a new site, when they can goto CL or Kijiji and pay nothing - and those other sites are established.

I know it's hard to imagine having a business where you don't make an immediate return; however, Twitter and Facebook were free (and still are to normal people). CL is free. Many many services we use daily are free - but are valued, if that makes sense. Twitter and Facebook are free services, but if they wanted to 'sell' to another company - they would be in the billions.

I hear ya on wanting immediate returns... but realize the competition you're going up against, and realize that 'free' may be the best course of action for the first year or so.

Just to add some additional insight. People want things for free online. The difficult thing with an Internet business is figuring out what a person would spend those few dollars on (most potential consumers have little money).

free for users (the masses)
not so free for advert....seems to have worked for everything from car forums to myspace, facebook and even youtube.

Originally Posted by JPatterson

You do have a lot of obstacles in your way. I think really examining your competitors (as you've already done) is key here. You have to justify why someone would come to your site and pay a fee to a new site, when they can goto CL or Kijiji and pay nothing - and those other sites are established.

I know it's hard to imagine having a business where you don't make an immediate return; however, Twitter and Facebook were free (and still are to normal people). CL is free. Many many services we use daily are free - but are valued, if that makes sense. Twitter and Facebook are free services, but if they wanted to 'sell' to another company - they would be in the billions.

I hear ya on wanting immediate returns... but realize the competition you're going up against, and realize that 'free' may be the best course of action for the first year or so.

I see what your saying. I eat the cost of development and hopefully it becomes widely popular. You mention twitter and facebook, but these were backed very early on by venture capital. I remember reading somewhere that in the early days youtube was burning through 1,000,000.00 a day. Looks like i need a great business plan and some vc's in mind. I dont know. I can see a vc being skeptical about giving millions to a free service when there are already some big players.

Research 'freemium'. It's the web 2.0 business model driving alot of huge online success stories.

And if your dealing with enough of a niche then maybe people would pay and you could go a completely different route. How do you find out? Ask.

I have a bad habit of keeping ideas close to my chest. There comes a point in time where you need to get some feedback.

Originally Posted by Go Getter

I see what your saying. I eat the cost of development and hopefully it becomes widely popular. You mention twitter and facebook, but these were backed very early on by venture capital. I remember reading somewhere that in the early days youtube was burning through 1,000,000.00 a day. Looks like i need a great business plan and some vc's in mind. I dont know. I can see a vc being skeptical about giving millions to a free service when there are already some big players.

Usually angel investors come to them because they are first to market, and often completely created a market.

VC's are later.

You will not find one example that didn't have a fully functioning scaled down version of what they currently are today.

Originally Posted by lifeoftheparty.

Usually angel investors come to them because they are first to market, and often completely created a market.

VC's are later.

You will not find one example that didn't have a fully functioning scaled down version of what they currently are today.

Good point. I would create a total business plan behind this before even investing a dollar.

You may also want to consider the direction of your competition. If what you are offering is so unique, what's to stop CL or Ebay from copying your idea once they see it becoming popular?

Of course you need a business plan.

But what I'm stressing is that before anyone will be anywhere near even looking at your site/idea it needs to exist. I know it sounds obvious.

Maybe pair up with a local web developer?

Originally Posted by Justdrive

what's to stop CL or Ebay from copying your idea once they see it becoming popular?

EXACTLY!. As soon as I dump my life savings trying to get a working model, CL , ebay or some big fish could copy me, and take my business right from under me. Looks how many twitter copy cats there are. On top of that, there is no guarantee an angel would even be interested in what i'm doing. These two things are some big concerns.



maybe there is a way for me to trademark the ways im different? so no one can copy my process?