Question
Is it possible to compete with free? If so, how?
Answer
Of course it is. Examples are all over the place. Microsoft vs. Linux. AirBnB vs. Couchsurfing (sort of), industry intelligence reports vs. Wikipedia, Posthaven vs. free blog platforms, books vs. blogs.
Pre-2000 or so, you did so by mainly by offering product/service SLAs. Then free software got to be better than paid and most SLAs were revealed to be BS because better guarantees on a worse product can leave you net negative.
2000-2010 we saw the rise of 3-way markets ("if you're not paying, you're the product"), where you could compete with free by NOT selling ads, personal info, etc. This too is a plateauing opportunity space because ad-supported products are often too expensive if actually charged for (example: mapping products, which require capital intensive surveying work). You can charge, but only governments and big companies can afford to pay.
2010 onwards, we saw increasing frustration with acqui-sunsets, unmaintained plugins in overly decentralized products, and other new kids of frustrating deep variability. Not the kind addressable by a product SLA because the underlying business model itself is unstable by design, rather than the product. So you really need a "business model SLA" of the kind that rigidly traditionalist businesses cannot make.
One example of a BM-SLA is to offer stability and longevity so people aren't reduced to herding butterflies in order to use a product. Posthaven is doing this versus Tumblr, Wordpress.com, etc. Their BM-SLA is a promise about the business rather than product. Another example is to promise never to take OPM (other people's money...VC etc.) which allows you to credibly promise a natural, sustainable bootstrapped growth rate. People pay for such promises.
There are other patterns. I can think of maybe a dozen major ones. Some sectors may be harder than others. But even with something like search, there may be conditions under which paid can work.
Not a quick 3-minute problem. For a typical specific business idea, you should expect weeks of careful thinking to com up with a model.
Pre-2000 or so, you did so by mainly by offering product/service SLAs. Then free software got to be better than paid and most SLAs were revealed to be BS because better guarantees on a worse product can leave you net negative.
2000-2010 we saw the rise of 3-way markets ("if you're not paying, you're the product"), where you could compete with free by NOT selling ads, personal info, etc. This too is a plateauing opportunity space because ad-supported products are often too expensive if actually charged for (example: mapping products, which require capital intensive surveying work). You can charge, but only governments and big companies can afford to pay.
2010 onwards, we saw increasing frustration with acqui-sunsets, unmaintained plugins in overly decentralized products, and other new kids of frustrating deep variability. Not the kind addressable by a product SLA because the underlying business model itself is unstable by design, rather than the product. So you really need a "business model SLA" of the kind that rigidly traditionalist businesses cannot make.
One example of a BM-SLA is to offer stability and longevity so people aren't reduced to herding butterflies in order to use a product. Posthaven is doing this versus Tumblr, Wordpress.com, etc. Their BM-SLA is a promise about the business rather than product. Another example is to promise never to take OPM (other people's money...VC etc.) which allows you to credibly promise a natural, sustainable bootstrapped growth rate. People pay for such promises.
There are other patterns. I can think of maybe a dozen major ones. Some sectors may be harder than others. But even with something like search, there may be conditions under which paid can work.
Not a quick 3-minute problem. For a typical specific business idea, you should expect weeks of careful thinking to com up with a model.