How Even a 10-year-old Can Compete with Free — and Win

by Inc.

As this story of a young entrepreneur shows, it’s entirely possible for companies to compete with free alternatives — it’s all about delivering the better product.

Frank Addante, founder and CEO of the Rubicon Project, was recently visiting a colleague’s home when he was introduced to his colleague’s 10-year-old son, who had a business problem. He and a friend had started offering yo-yo repair and upgrade services — things like installing extra-long strings and inner-gear modifications for tricks. Only now a fellow classmate was offering similar yo-yo services for free. “He was Googled!” the boy’s father exclaimed to Addante. When Addante asked the boy how he was competing with the free alternative and the boy replied that he and his partner were essentially modifying their pitch, highlighting their higher-quality work and the fact that their competitor (who had recently purchased a $95 yo-yo) didn’t understand the needs of the average yo-yo customer.

“In a matter of weeks,” Addante writes, “this 10-year-old entrepreneur found a market (yo-yo owners), identified a need he could serve (fixing and upgrading yo-yos), secured an investor (his brother), and is now facing competitive pressure from a new market entrant. Indeed, the fundamentals of most businesses are the same as this: identify market pain, provide a superior solution, compete, modify strategy to adjust to the market, and repeat.” Though the boy needed to react to his “free” competition, business was doing just fine. For Addante, his story underscores the fact that, “In the end, the best product wins.  Focus on building a truly great product and offer it to your customers with great service to back it up.  People have proven time and time again that they’ll choose (and pay for) a better product over a free one.” For the full story, read Addante’s post over at Inc.

Related Content from OpenView:

Open source or “free” software can make competitive positioning difficult for companies that charge for their product, but it’s not impossible. Click here for more advice on how to sell against free software competition. And to learn how to turn competition to your advantage, read this post from the OpenView Blog.