How do you Sell Against Free Software: Part I

While doing market research for one of our portfolio company target segments last week, I found that the biggest barrier to going after that segment was the existing “free” or open source software in that market. Competitive positioning seemed hard in the beginning, but we soon found that the segment had a need for our product. Consumers in this segment used free software, not because they loved the functionalities and saw a lot of value in them, but because the software were available to them at no cost. Our portfolio company software did a better job at meeting the users’ specific needs and provided the added benefit of compiling all the functionalities into one single platform, making it more convenient. So, the question remained, even though our software was better, how do we compete with what’s out there for free?
A lot of free software is “free” if your time is worth nothing. When a user spends time trying to make a software product work, or trying to make it do things that the software is not designed to do, then the cost is the time spent in figuring it out. Since a lot of customers have a hard time wrapping their minds around this concept, “free” is all they see. So, the harder challenge lay with how do we make it more explicit and show our customers the added value in using our product? The following presents a few findings from my research, explaining ways of getting around free products:
Be found: Make sure that your product appears in the top few of the search listings using Search Engine Optimization techniques. You want your website to rank higher than those of your competing free software.
Make a better product, and show how it is better than the free ones: Free products are usually very basic, containing simpler functionalities; they are often stripped-down versions of what customers would otherwise have to pay for. Market your software showcasing your distinctive features that solve specific customer pain-points that free software do not. The Product and Development Team should keep ease-of-use in mind when designing the functionalities. This way, you will not only have a product that’s robust and feature-rich, but also one that’s intuitive and user-friendly. Promote your product emphasizing these attributes.
Make it easy-to-use; provide a more efficient installation process: Design and program software in a way that’s intuitive for your customers. They shouldn’t have to turn to piles to booklets to figure out how to run your program and use its different features. You can have wizards that explain your applications and can guide your customers through them.
Make your product better looking: Everyone likes good-looking, fun software. More visual users will prefer something that looks more fun and appealing to their eyes. Make your User Interface look professional, yet fun. This way its attractiveness will distinguish itself from the free alternatives.

I will share the rest of my findings with you next week. Stay tuned…

Here are some articles about competing against free software products:
http://www.strategy-business.com/article/re00045?gko=3e433 http://jeremiafroyland.com/how-to-compete-with-cheap-or-even-free-products/ http://www.developer-resource.com/how-to-compete-against-free-software.htm http://www.softwarebyrob.com/2009/08/11/how-to-compete-against-open-source-competition/