This month’s Wired Magazine has a great article about why the new pricepoint for many things is free.
The article is written by Chris Anderson, whose last book – the Long Tail – I read a couple of years ago. The book has heavily influenced my training business.
The thrust of the article is that, as the costs of production go down, the price to the customer should go down…
… therefore businesses need to continually innovate to work out how to deliver more value to the customer (that can be charged for) as what they used to charge for becomes free.
In many (most?) cases, the thing that’s forcing the prices down is competition, legitimate or otherwise.
When it took several hundred thousand pounds to set up a CD-mastering facility, not many people could produce them. Not only was there little piracy, but there weren’t many CDs out there – if you wanted a CD of, say, the Durufle Requiem, then Hyperion had about the only one … now there are numerous recordings of that piece on CD, from major choirs through to schools and churches. (And I pick an example from relatively obscure classical music deliberately – this choice extends in many dimensions.)
In my own training industry, we’ve seen this move – sales of CDs are holding up OK, but hardly booming, and sales of my book are doing OK, but generating less cash than I would have earnt in six months of IT contracting (which is pretty much how long it took to work on the book.)
Where it has worked, though, is that I have more clients asking me to work with them in negotiations (interestingly, in IT as well as property!) because of the “exposure” that the book has generated…
… and it certainly has helped establish credibility with my mentoring programme clients.
Does it apply to property investment though? Well, maybe, actually… One startup I’m involved with got free office space from their accountant in exchange for getting a 2-year commitment on accountancy work!
The next step, to offer people free housing in exchange for a certain amount of work is something I KNOW that that smart investors are looking at.