Free is a great model; it scales very well for the end user. Problem is, a business built on free can have some real trouble making a profit, or in some cases even surviving, as it tries to evolve the model from the happy place that attracted all those users in the first place.

Twitter is a grand example of this. Arguably one of the most successful free service models in the past few years, Twitter has struggled mightily with every suggested way to turn a profit though they have tens of millions of users.

Small businesses of every shape and size can benefit from the attraction that is free, but there are some tried and true methods for using this model and still turning a profit.

Build something people really want

Okay this should seem pretty obvious, but even something that’s free must offer value or people will quickly abandon it. The thing that makes free really worth pursuing as a profitable strategy is when, not only do people want what you are offering, they get hooked on it, they depend upon it, and they tell others about it.

The key is to create valuable trial offers, services, tools, and even evaluations and checklists that make people want more. The more of course comes with a price tag attached.

Aaron Wall writes the very smart SEOBook and offers a paid subscription to his SEO services, but his free SEO Tools, RankChecker and SEOToolbar, are so good you get hooked on hearing from him.

30-day free trial

Online services such as Basecamp, FreshBooks and Central Desktop have done very well letting people try their services for 30 or 60 days or even creating totally free versions that give a taste for what a full paid option can do.

This model is one that I think almost any service provider could employ. You probably do this already in affect, but why not use it as a selling tool. What if you offered a 30-day money back guarantee or simple free trial period with no obligation? Would that allow you to stand out and get some new business with a free model?

Give some away and charge for the rest

eMarketer is a pretty good example of this type of approach. They give away tons of very good content through articles and offer something they call Total Access for the full meal deal.

This is the place where you can create much deeper levels of content, research and even events that feature high profile speakers.

Tiers of membership

MarketingProfs is one of my favorite membership sites. ProMembers get a tremendous amount of exclusive content as well as discounts to webinars and other events.

This is another approach that I think is waiting for every small business to adopt. If you produce content or sell a product that are many ways to add an exclusive club type benefit for your “premium” customers. Offer exclusive content, a book club, trips, high profile speakers, events or custom research for being a member of the club.

You can offer basic, pro and platinum levels based on various criteria. Consider a membership level for customers that refer business. Software scripts like WishListMember or Extreme Member

Niche a proven free

Returning to Twitter, several new services have cropped up attempting to build profitable models around the already active Twittersphere, but in niches that aim to make the free info more useful.

TweetUp, founded by paid search veteran Bill Gross, is trying to monetize what it is calling the world’s best tweets and tweeters. It offers a bidding system that can help people discover the best content and help some on Twitter build large followings.

Other players, such as TweetMyJobs, are focusing on helping organizations do things like recruit new employees tapping the Twitter user base.

Any business that sells a product or service can raise themselves out of the commodity (almost free) ranks by taking a proven, needed service and turning it into a proven, needed service just for accountants or new homeowner or remodeling contractors.

Claiming a niche is a great way to dig out from free.

Image credit: loudestnoise