By: Dezmon Landers

After a discussion I had with some colleagues this evening, I was blown away with the lack of understanding of why websites are more popular/make more money/receive attention (buzz) than others. This discussion usual revolves around free sites and premium (paid) sites. Let me explain my understanding between free and premium sites (other than the obvious).

A free site allows you to reach a solution without paying for it. LinkedIn.com allows me to network with colleagues without paying. Even though they have services that require payment, I don’t need it to perform the main service of the site, networking. This is why I deem LinkedIn a free site. And then you have the super obvious example, Facebook.

There are two versions of premium sites. The most obvious is paying upfront for a service or product. The second is only paying if you actually receive a solution to a problem (talking about quality, stay with me). Prosper.com is a peer-to-peer lending service. Do you pay an upfront fee? No, you pay a percentage of the loan you receive from other members. So you only have to pay for the service if you get the service you signed up for. How convenient.

Another big difference between paid and free sites are the traffic and members that join, especially if the paid site is an upfront fee for the ultimate solution.

I work on the marketing side of a few startups that (almost) all require an upfront fee for the services they provide. This is not an issue till I have to repeatedly explain why these paid services do not grow as fast as free services. Often compared to sites that have been absurdly successful like LinkedIn or Prosper and even Facebook once.

Now to todays lesson.

Anytime someone has to pull out a credit card to achieve a solution on the internet, the number of willing candidates is reduced.

Another big issue I have to explain and I hope anyone running a web business has thought through is the market you are in. If I sell financial services, don’t compare my growth to LinkedIn (which is equivalent to a free networking site). If I sell a financial service to businesses, don’t compare my growth to a financial service website that sells to individuals. The market size and type of products offered make a comparison unequal.

If you don’t understand the market you are in or the market other sites are in and how that effects growth, you are in over your head.

<End Rant>