Can You Sell Something That Is Available For Free?

Setting a price for a product is tricky business. Particularly when a substitute is available for a low price. If you price the product too low, you risk viability. If you price high, nobody wants to buy your product.

As an extreme case of this dilemma, let's ask ourselves the question: Can you sell something for a price if that product is available for free?

Consider photo sharing. With Picasa and numerous other photo sharing sites that are free, is there a business model for a site which charges a subscription fee for photo sharing?

For an answer, we need to look no further than Smugmug, a site that charges you $40 to $150 per year to share photos online. Are they out of their mind? Apparently not. They have 300,000 paying customers, and have nearly a billion photos hosted at the time of this writing.

How do they pull this off? I will let you decide. Here is some messaging from their site.

• You Look Better Here
• Your photos look better here
• Your fans will tell you how great your photos look here

Here is what they have to say about themselves.

• We dream of an independent company devoted to nothing but your priceless photos.
• A company that backs up your precious memories so they're safe and sound.
• A profitable, debt-free company.
• That earns your fanatical loyalty.
• We're living that dream.

I am sure there are other examples where people willingly pay more to obtain a product or a service from a provider because they believe - correctly - that they are getting more value.