We’ve all heard the expression that ‘there’s no such thing as a free lunch’ but it’s true that a significant amount of people think that the cool app that they have just started using in the cloud is somehow magically paid for by the fairies! This post is designed to help you spot some of the ways that cloud software companies will use to part you from your money.
The cloud has brought a huge amount of really useful tools within reach of even the smallest companies. I confess to having love for Mailchimp, TeamworksPm and GoogleDocs. I’m getting into a load of others too and I’m using them all on their free plans – but ‘FREE’ doesn’t always mean free.
So how do companies charge for their services? Here are some of the business models;
1 – Subscriptions – This is possibly the most up front method that a company will use. You pay a set amount from day 1 of using the product. That’s it. Nice and easy to understand but often companies won’t give you a free period to see if you like it. Consequently if you sign up, enter all your data, train your staff then find out you don’t like it then you’re stuck. Bigger developers will use this and probably ally it with sales people.
2 – Advertising – This is the easiest to spot and is the method used by companies like Facebook. Seen all those annoying ads next to your profile? Well they are paying for your software. Marketers pay to advertise next to people who share similar interests and values to the product or service they are trying to sell. This is sometimes combined with the subscription model so it’s free with ads or if you pay a subscription the ads disappear.
3 – Reduced functionality – Want our app for free? Yes of course but if you want to do all of the cool stuff that it is capable of then you’ll have to pay. Apps like Prezi and Batchbook and TeamworkPM will give you the ‘lite’ version to get you using their product but when you want to do something a little more advanced then you’ll have to buy a subscription. This is a great way to get into an app but beware – some may not let you export your data if you decide to move away later.
4 – Restricted activity – This is the easiest to disguise. The app works absolutely fine in all respects but only up to a certain level of activity. Want more users? Want to upload more times in a month? Want to send out more invoices? Then you’ll have to pay. Apps like Box and Dropbox use this model.
5 – Time limited – Everything but for a trial period only. The trial period is designed to let you have a look, play, get some stuff going and form a habit. Once it gets switched off then you can’t access your stuff and you miss it. Videoscribe use this but to be honest 7 days trial is too short in my opinion.
6 – Composite methods – Some or all of the above. You’ll find that the more you pay the more users you can add, the more functionality is available and the more like a custom made application it becomes.
The cloud has led to a massive increase in the amount of apps available. The quality is variable to be honest but the one common theme is that they haven’t all been designed out of the goodness of people’s hearts!* If you are unsure then carry out a Google search, do lots of research and work out how you’ll use the service or alternatively see the advertisement below.
Let’s be fair, some of these companies have spent millions bringing to market a superb application that will make your life a lot better so they deserve to be paid for their effort and they are honest and upfront about the whole thing. (look for a page on their site called ‘Pricing’ or ‘Plans’). Some though aren’t totally transparent and users only find out what they have to pay for when it’s too late.
This is what I do for companies. If you are thinking about buying software then call me first. I give an independent and impartial view as to whether it’s a good move for you or not and it’s a lot cheaper than making the wrong decision.
* Yes Linux,open office etc. HAVE been designed out of the goodness of people’s hearts but in general the majority of the stuff you come across in internetland will be trying to work out how to get into your wallet.