I spent a lot of time recently trying to explain monetization to colleagues.
The term "monetization" may also be used informally to refer to … charging fees for something that used to be free, or attempting to make money on goods or services that were previously unprofitable or had been considered to have the potential to earn profits. (Wikipedia)
Monetization is the ability to make money on an idea, concept, product, or service. Money, meaning profit, and not simply revenue (at least in my definition). Why is this important to you, and your company?
- Free does not achieve the goal of profit. Unless your free product or service leads to other profit revenue (called 'give to get'), then giving something for free actually moves you away from your goals of profitability. Moving forward, the customer will expect that level of product or service for free (or even the expectation that you pay them!).
- Monetization shows that your product has value. If your product or service is free, then it has NO VALUE.
- Example: Bottled Water. If we get the bottled water for free, we never seem to finish the bottle. If we pay $4 for that same water, we make sure we finish the bottle. Same water, different value.
- Technology (cool products) does not, by itself, create value. Solving problems brings value and therefore creates monetization.
- You must have a value proposition to 'monetize' your work - see my blog post http://connectingthedata.blogspot.com/2013/08/value-proposition-why-you-need-one.html
TURNING FREE INTO PROFIT
How do you take something from free to monetized:
- Don't ever make something free. That is an oversimplification of the issue - but clearly get your 'give to get' in alignment. This is especially true of services.
- Make sure the give is defined.
- Make especially sure when you will receive your get. Often the when is undefined and therefore the 'when' never happens, all the while the other side has gotten the 'get'.
- You must ask your customers what opportunities they are trying to leverage, and align your product or services to those customer opportunities.
- ADD VALUE. Value is not the special way you do your service, your new user interface, or some obscure packaging feature. It is the problems your customer is having, and your ability to solve that problem, creates value.
DATA + MAKING MONEY
So there is a lot of talk about that all data, information should be free to all. Stay tuned later for another blog, but needless to say - data is free, but not manipulating the data to get the useful/relevant information you need. Therefore, the monetization is the manipulation (organization, synthesis, and usefulness).
Think about how to monetize your service, your product, and most especially how you will 'monetize' yourself each day. What is your personal value proposition?
David Haynes, PMP, is Director of Consulting at Ideate, Inc. (www.ideateinc.com). David's experience is in providing companies with business process analysis and change implementation. @dhaynestech.