Inspired by the internet
Myself and Prateek were discussing the other day about how existing brick and mortar companies would alter their business plan and functioning if they got inspired by the internet companies. The core objective is this – Never charge your customer for your core competency(offering). Give it away for free to attract more customers. Make money through something not directly related to your offering.
It is evil to charge your customers. It is your problem if you are not creative enough to come up with other attractive ways to make a business of your offering.
I am jotting a few of them here. All contributions welcome.
KFC, Mac D and the likes
Everything in the menu is free. The company takes a cut from the tip to the waiter ( Tipping is not mandatory).
Automobile companies
The vehicle is free. The customers will be charged for all accessories and maintenance
The Wall marts and the Big bazaars
All items on display free. Customers will be charged for parking space
The above examples sound hilarious, almost ridiculous. But the this is the norm in the internet world!
Let’s see how the whole ‘attention economy’ thing unfolds!
9 Responses to 'Inspired by the internet'
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Good thought, but the stated ideas doesn’t sound feasible in india atleast for this moment…
Restaurants- most of us do not tip and even if we tip that is less than 4-5% of bill amount… Can we run a restaurant in that amount?
Automobiles: What if customers go to some other mechanic/shop for maintenance?
Big Bazaar: Majority of customers come by auto public transport… For someone who buys a Rs 30,000 TV (it is free) how much do you expect to recover from parking fee?
Long back I’d suggested that public toilets should be made free and operating cost should be recovered by displaying ads… Many didn’t find it feasible
The idea may work in some cases- like giving sim card free and charging for monthly usage…
Btb if you’re starting a restaurant/market with above business model tell me first.. I’ll be your regular customer…
Shrinidhi Hande
17 Feb 09 at 8:28 pm
Srinidhi! You just about managed to miss my sarcasm on the subject:)
Nithya Dayal
17 Feb 09 at 8:46 pm
Well, Yes.
But HP has been doing something similar… THey sell printers very cheap and earn by selling overpriced cartridges..
It is also a old time joke which says “Son, I don’t earn anything by selling them, I earn when they come back for repairs”
Most of the highway hotel serve free food to bus driver and conductors, for bringing customers by stopping the bus in front of their hotel…
Sarcasm and reality apart, we never know when someone would make this impossible possible…
Shrinidhi Hande
18 Feb 09 at 9:06 pm
Srinidhi, The above examples that you stated still make sense cos HP and the also the restaurants you mentioned at the end of the day sell something which they set out to sell.
What baffles me is the expectation of a ‘free service’ on the internet which has become a norm. As I mentioned in the post I am waiting for the ‘attention economy’ thing to unfold.
Nithya Dayal
20 Feb 09 at 9:18 am
You’re expecting an environment wherein people pay for everything, say visiting a website. Just trying to imagine my monthly bill if that starts happening…
I feel many sites which have proven content/service to offer are already on a pay and use mode. Since no one has complete command over internet to dictate “ok, from tomorrow no one offers anything free…” rest will take a long time to catch up and be able to command a price…
Just my opinion…
Shrinidhi Hande
6 Mar 09 at 12:25 am
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HS SANDESH
25 Mar 09 at 9:51 am
May be it’s the easy and plentiful alternatives that are available to the user on the internet that keep most of these sites away from ever daring to charge anything. Their customers will simply go away, if they charge a service fee. You also seem to overlook the fact that many so called business/services on the net are just redundant clones and offer no real value proposition.
amar
1 Jun 09 at 12:25 pm
One of the few ‘Brick n mortar’ companies that have managed to sustain the ‘Freemium’ model is Gillette – selling cheap razors with expensive blades. However there is fundamental difference in the economics of a product and service company, which dictates the pricing models. That being the marginal cost: every ‘offering’ that has more value than the marginal offering is priced at a premium that is just enough to off-set its value over the marginal offering. So, in your example, if restaurants could exponentially (or some other function)increase parking fees based on the minutes spent in the restaurant (directly proportional to the value of the offering, quite literally
) then they will be able to offset their costs. In any case, the end result is the same – customers have to pay one way or the other. And I dont think the mass-market outreach of the Internet can be replicated for a local business, so it inevitably comes down to the same thing. And this conundrum increases its appeal…
Sandip
21 Apr 10 at 12:44 am
@Sandip I definitely wasn’t trying to convey through this post that web models are applicable in the real world. I was rather looking at it this way: What sounds impossible in the real world is the norm in the virtual world, even when the cost of adding customers or serving them cannot be dismissed as marginal.
@Amar True. Most businesses don’t charge because they are scared. Scared because they don’t add any real value.
Nithya Dayal
22 Apr 10 at 3:34 am