The Value Of Free As Analyzed By The Pizza Industry
from the is-there-a-pizzster? dept
When discussing "free" and its use as a promotional marketing tool, we often point to the fact that it's hardly a new concept at all -- and the idea of "buy one, get one free" or "free coupons" has been used successfully in the restaurant business for ages. Yet, it appears that some in the food business are going through the same debates that we find ourselves in around here concerning the use of "free" within a business model for the sake of promotion. I would imagine this has become an even bigger issue as many restaurants and restaurant chains experimented this year with big time "free" promotions.A few weeks back, reader Josh sent in this analysis from someone in the pizza industry about why "free" makes a lot of sense as a piece of a larger marketing strategy. What struck me is how similar the discussion is to the discussions we have here. There are people who complain that giving away free food "devalues" the food. You have people complaining that the "cost" of free food is too high. But, in the end, the guy makes a good case for why free is a great system, for bringing in new customers, who can turn into loyal paying customers:
Many times I hear, "Giving away free food diminishes the value of my brand." My response is usually laughter, followed by a question: "Are you kidding me?" The goal with free food is to drive qualified prospective customers into your establishment to try your food, service and experience.Of course, the economics with food is quite a bit different than with content. With food, each "free sample" has a direct cost in that the same items cannot be sold. With content, the argument in favor of using "free" is even stronger, because you are just giving away copies -- and each copy is free to make and distribute, even if the original copy cost money.
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Who the hell are these people?
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Re: Who the hell are these people?
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Re: Re: Who the hell are these people?
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Re: Re: Who the hell are these people?
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bogo is stealing
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Re: bogo is stealing
My internet generation and I don't know the value of anything these days!
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Re: Re: bogo is stealing
Every time you make your own you're stealing sales from pizza hut!
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Re: Re: bogo is stealing
Beavis: he-he, we know its worth some nachos.
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But there is one catch with free
This assumes that you have quality products for people to see. It means they see that you have a product they want at a price they are willing to pay.
Driving customers to your product does no good if they don't find what they want when they get there.
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Re: But there is one catch with free
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Re: Re: But there is one catch with free
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Re: But there is one catch with free
Does this remind you of any particular organisation ?
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Re:
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Paper about from the U.S. government in 2003(I think) about the free flow of ideas and how those ideas without patents lead to innovation and money.
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And they want a lot of pizza. What are those pizza joints supposed to do?
They stop making pizza, that's what. And what does this have to do with digital content?
Absolutely nothing.
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Re:
They'd undoubtedly pay premium for drinks and sides, but you don't care when the Pizza's free!
Then that reluctant, old fashioned, idiot Pizza joint owner who refused to cater for a rapidly changing market would be looking for a new job.
Plus this is pretty redundant, because you're assuming that ALL pizza would ALWAYS be offered free, which is not what's happening, or whats being suggested: You give your basic, normal Pizza's for free, then offer reasonably priced high quality pizza's and a good range of attractively priced sides and extras.
It's pretty easy to carry the metaphor in to digital content if you have an imagination, but unfortunately you seem to suffer from the same problem as the idiots in charge. You don't have one and are, as such, incapable of thinking your way out of a box. You just keep hitting the sides and yelling at everyone on the outside.
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Re: Re:
Food costs are suppose to be about 35% of a restaurant's take. You can screw with that a bit, and maybe make it 50 or 60%, but in the end, the profit and the other parts of the business suffer.
Further, and just as important, free pizza does little to drive more business, except perhaps business for more free pizza. When the likely results (people expecting Pizza to always be free) don't support the business model, why do it?
In the end, samples, tastings, discounts are all good, providing it is clear what they are, and providing they don't undermine your entire business model. Giving pizza away for free not only cuts income, it also cuts the percieved value of the product, doubly so if your upsell is to a better "high quality pizza".
As for thinking outside of the box, well, let's just say that some people don't hit the sides of the box because their business models don't support the costs of a box. It's easy to think without limits when you don't let things like the bottom line get in the way.
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Re: Re: Re:
Take note marketing gurus, The Anti-Mike has thrown down the gauntlet stating that ye who give away free shall ... ummm - well ... he really didn't say much at all - oh well - never mind.
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Re:
Absolutely nothing.
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Re: Re:
Good ol' anti-mike missing the point again.
The pizza one doesn't work, because you couldn't afford to give it out for free because of the production costs.
However, if Pizza cost close to £0 to produce and everyone knew that, would they pay £15 for one?
No, they wouldn't. And the Pizza places would need to find a new way to make money from their Pizza, or stop making it. Except people still want Pizza, so why stop making it just because your existing business model has become obselete?
Trying to tell people 'yes, now we can make Pizza's for next to nothing, but you must pay the same, nay MORE for them' but then refuse to justify it would put you out of business.
The fact is that digital media ALREADY IS devalued by the publics knowledge of its actual cost. Ignoring that and trying to pretend that it's still worth what it once was is just plain dumb. Find a new way to pay for your box or get out of it entirely.
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Papa Johns rocks in Customer Service
2 months later, when I got my delivery, they handed me a coupon that said "Free side + 2 liter" and the next day, I got a call about them saying they were a little late in delivering, and I thanked them for the coupon.
Now, with Pizza Hut, I have never received any calls about them being late, and being offered anything. This, is why I haven't ordered from Pizza Hut since I ordered Papa Johns online.
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Re: Papa Johns rocks in Customer Service
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Pizza Marketing
And -- for the commentator who wonders what "free" has to do with online content -- isn't that exactly what has been discussed in the context of bands offering samples "free" in order to get purchaser's to buy a whole disk?
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Re: Pizza Marketing
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Re: Where's my eggamuffin
Yes, I'm sure you are correct.
btw, you must be that cop who tazed the granny in a wheelchair - right ?
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I have never seen so many people insulting each other over which generation they belong to.
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I R has replicator
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how to use a dvdr as a free pizza
i discovered h264 recoding on xvids to be kinda interesting
while you lose about 5% quality you save 40-50% size
create a data dvdr
place 14 movies on it
and sell that for 10$
while i dont do that hollywood could
imagine thats what tech is for no?
and if you want better quality you pay a lil more and get less
see its easy as free pizza
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Customer rewards also fall under this category
It seems like pretty basic business to me - stand out from the competition with exceptional customer service and/or free stuff, get more business from your customers.
Of course, the music industry understands this just fine. The record labels simply realize that the new industry isn't one they can control with an iron fist like they do now, and they're doing everything they can to stop the future from happening. The ones that give it up and adapt will be the survivors, the rest will die out and not be missed. Bands will still be quite happy to pay reasonable fees for quality marketing services, as they more than pay for themselves - they just aren't going to hand an obsolete industry a huge chunk of their income.
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when free ain't "FREE!"
I read this story and I have to laugh. What the pizza business (and most other "goods" companies for that matter) are doing has nothing to do with "FREE!", and has everything to do with sample marketing which has been around since christ was a choir boy.
If they were doing free, they would give the pizza away for free and charge $9 for a 2 litre of pepsi. They aren't doing that. All the are doing is offering a sample, a tasting, a one timer to get people in the door.
It would be on the level of a band giving away the first 30 seconds of a song, and then selling people the whole album. In fact, the music industry did the sample thing for years, via this amazing thing called radio. You get to hear the whole song in a somewhat compressed format, and you can always buy the full value version if you so desire from your local music store, or now online.
Oh, Mike, I got a sample of dishwashing machine soap in the mail the other day. Are you going to claim that they suddenly discovered "FREE!" as well?
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Re: when free ain't "FREE!"
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Re: when free ain't "FREE!"
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Re: when free ain't "FREE!"
- Hey, dumb ass. Try reading the intro before commenting.
Mike -> "When discussing "free" and its use as a promotional marketing tool, we often point to the fact that it's hardly a new concept at all -- and the idea of "buy one, get one free" or "free coupons" has been used successfully in the restaurant business for ages."
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Re: Re: when free ain't "FREE!"
What Mike is trying to suggest is that you can give something away for free and drive customers to premium products, a "see, it works!" attitude.
There are always circumstances where almost any marketing strategy works. Giving away free food to a client once (sample) isn't the same as giving away your entire product (here is all the music in the world for free). People get hungry again in a few hours and need to eat. It isn't giving them something they can enjoy over and over again, it's giving them a tease once.
it is must more of a marketing strategy like playing music on the radio or similar. It isn't giving lifelong enjoyment, just a sample.
It's one of the reasons why the "all music is free" business model isn't really a business model.
As for Mr Tibet, well, we all know that the US makes nothing but absolutely perfect products without defect, right?
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Re: Re: Re: when free ain't "FREE!"
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Re: Re: Re: when free ain't "FREE!"
Gee, I guess looking at it from that point of view makes everything ok then.
To all those who have lost a child, a pet, or those who can no longer live in their homes, keep your chins up because according to The Anti-Mike this sort of thing happens all the time and you should just accept it. /s
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Re: Re: Re: when free ain't "FREE!"
Now that the interweb gives you a new way of 'taping' songs they're doing the same thing.
Who said all music ever produced across the entire world needs to be free? Did anyone say that?
No - make it easier for people to get the free stuff and guide them to the profit making thinfs!
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Re: when free ain't "FREE!"
I'm positive that all frequent readers of this site automatically assume that your comments exist solely for your personal benefit, because they never seem to have any actual relevance to the articles other than hitting a few similar buzzwords.
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Re: when free ain't "FREE!"
Dude - while you're over there schmoozing with our new overlords, you might mention off the cuff that we would really appreciate a refund for all the poisonous products they send here. You know, the lead painted kids toys, melamine tainted pet food and the sulphur drywall. If you could do that, it would be really great. Have a nice day.
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An analogy must be analogous for it to be an analogy...
That's absurd. Your anaalogy only works if you ignore all the relevant differences. Like the fact that free pizza can't be duplicated and redistributed. That pizza has a shelf life. You eat a pizza, tomorrow you need another. The first one is gone. There is so much wrong with you baseless association of these two very different things.
Seriously. At least pretend to put some thought into your words. What you've written here is just plain stupid.
-Me
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Re: An analogy must be analogous for it to be an analogy...
You have obviously never been to college. Cold pizza is the breakfast of champions.
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Ingredients, Tips.
Pizza doesn't have any premium ingredients. It's not like steak, or seafood, or a salad. The cost of ingredients at supermarket prices would be about ten percent of the selling price, and of course the restaurant buys wholesale from a distributor at still lower prices. The dominant costs are fixed costs, the most important probably being the rent. The rent has to be paid, whether the pizza shop sells anything or not. The same analysis would apply to the major fast-food restaurants. Arby's and Subway might be boundary cases, because they sell sandwiches built around sliced meat. They can't go quite as far in cutting ingredient costs as McDonalds can.
If you want to talk about restaurant economics, the interesting thing to discuss is the tip. The tip is paid after the fact, and at the pleasure of the customer, and, often enough, with no realistic expectation of ever meeting a given waitress again. I saw some statistics some years ago, to the effect that men regularly tip twice as much as women. I don't know if that is still current. Street minstrels are paid in much the same way that waitresses are, only more so.
Of course, rock musicians all seem to be power fantasists. They aren't really interested in the actual prospects of making a modest living playing music. They want to be worshiped as gods. They are such little men.
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Re: Ingredients, Tips.
The 35% number is pretty much the food service industry standard for a normal establishment. Some pizza places do it for much lower levels, mostly because they use crap ingredients. You can do it very cheaply is you have no interest in the end product.
Even the fast food industry mostly controls their food costs via huge discounts on nationwide bulk buying and supply agreements. It is one of the many reasons that major chains can outprice local burger stands.
Tipping is always an interesting science. I saw one test a few years back (TV show) that showed, example, that women servers made more tips than men, in general, and when serving male customers, a little more subtle flirting or a little more exposed skin could shift the tip signficantly.
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Re: Re: Ingredients, Tips.
Andrew D. Todd -> The figure of 35% food cost, which he cites, is for rather more upscale eateries.
TAM -> The 35% number is pretty much the food service industry standard for a normal establishment. Some pizza places do it for much lower levels, mostly because they use crap ingredients
- The Anti-Mike wants to use an average figure which includes all restaurants. Andrew states that the 35% figure is found at only one segment of the industry. In this case, I think Andrew has the stronger argument. I get a lot of snail mail spam offering bogo pizza and all of them are from the lower end of the restaurant spectrum. I don't recall ever receiving an offer from an upscale pizza joint. Up scale restaurants typicaly do not need to offer such incentives because their product speaks for itself. If you are looking for a deal on pizza, you are probably not interested in a sit down classy dinner. btw, some of the best pizza I have ever had was in Chicago at an up scale pizza joint.
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Re: Re: Ingredients, Tips.
Why people constantly post elsewhere drives me insane. Threaded comments should be standard!!!
Also, the fact that I can read TAM's posts for free make me devalue his opinion.
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Re: Re: Re: Ingredients, Tips.
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Re: Re: Re: Ingredients, Tips.
Comment of the day award goes to one of the ACs
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New Techdirt-themed pizza shirts! LOOOOOTS of pizza shirts!
To celebrate an upcoming event, which I am sure you've booked, I've worked hard with my overseas Chinese labor to have a set of T-Shirts available to you.
***************
Check out the sample T-Shirts now available to you and your blog readers!
***************
Of course, you already realize your discovery of "free" will be far-reaching, and will be first commercially realized by the Pizza Delivery Industry.
So I've had my overseas inventors working round the clock, and we've developed a new hot-glue method to secure your book "A Roach Of Affinity" or whatever it's called, on the top of pizza boxes across America. We want this to be successful so your book stays on the pizza box while you remain Master of Ceremonies on a special pizza-themed celebrity cruise referred to as "The Cheesy Copyright Assignees Pizza Cruise"!, or so say my insiders. Indeed, you should prepare to host this event with the utmost bravado because your discoveries remains significant in the most absolute fashion.
Attaboy, Sir!
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Re: New Techdirt-themed pizza shirts! LOOOOOTS of pizza shirts!
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Re: New Techdirt-themed pizza shirts! LOOOOOTS of pizza shirts!
For 175 years copyright wasn't that complicated at all. But then they had to extend it from 56 years to centuries. Who are they? The content owners who lobbied the political class, that's who.
Certainly not the public.
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I Like Buy One And
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"Corn ucopia is a concept design for a personal food factory that brings the versatility of the digital world to the realm of cooking. In essence, it is a three dimensional printer for food, which works by storing, precisely mixing, depositing and cooking layers of ingredients."
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allow me to introduce myself ima man of wealth and taste
prob is the movie still costs too much
what the article really alludes ot is the illusion of free
as in you pay the normal price and get second pizza free
fact is they make so much profit off that sinlge pizza on its own they can still give you another and seem like good guys
and yes they over charge you on pop and such that YOU MUST buy as a package deal this increasing price more
you head doesnt compute that when they done wiht you your paying very close ot what two pizzas on own would normally cost with normal pop costs.
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listen up fool
ya know guy i tried to understand how giving a customer nothing and overcharging them would bring business in when you claim it doesn't but hey your right customers are too smart and they know when your fucking them over and price gouging and what if you ( say as the CRIA ) didn't pay the suppliers for years for the ingredients to make your pizza)
that is what the riaa and cria are doing
and you expect me to pay for the pizza when your effectively stealing form the suppliers
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Going out!
I can imagine a bar using the Free Beer Project to attract costumers that would produce their own either by themselves or using some rental equipment in the bar an pay for storage and a place to drink with their buddies. The beer is free but the work put on it is not so everyone can do it now and people can still make money offering something that caters to the needs of that group. This could lead to LOCAL manufacturing and services that would generate LOCAL jobs.
More ambitious is the Open Source Drug Discovery
I can see hospitals, pharmacies and even individuals pouring resources to research new drugs that will be free to use and produce for anyone and people will be able to afford medicine again and not be encumbered by patents. I can see LOCAL pharmaceutical industries catering to LOCAL markets and doing something no corporation can do, "quality costumer service" at low prices with quality products.
Something that can happen now, peer energy production that will turn the cost of energy to almost zero for most people through the use of hydrogen energy generators that can be made from methane or hydrolysis + solar cells, honda and panasonic sell those in Japan already, and this could lead to a robust power grid that is robust and reliable no single infra-structure for failure will cripple any neighborhood with LOCAL benefits.
Same with music or anything really people fail to recognize where the real value is and in doing so fail to capitalize on it.
Would those things for free work?
They already do, it just people who are blind that can see the light.
The great thing I see about open source initiatives is that they focuses in the "LOCAL" part of things it may even not be that much difference or even start a bit higher but the advantages to LOCAL economies is appealing to say the least and the greater improvement in "costumer service" may even offset the price, wouldn't you like a doctor that was not being paid by big pharma to diagnose you?
In music we already can see the alternatives growing in numbers and quality an example can be Shannon Hurley in the CCMixter project that uses the GPL license and give the source music to rebuild her songs.
Maybe the pizza guys should make the open pizza project and attract costumers by letting them build their own pizzas and selling in conjunction with them to their parents and friends the incentive is double in that greatly improves costumer retention at you gain from free LOCAL advertisement, one could do LOCAL competitions for the best pizza recipes and people would be proud of LOCAL participants.
I think the era of the "I" is being substituted by the era of "we". No partnerships equals no costumer loyalty, no sales, no respect.
Look at the music industry at you see what that means. The public is no longer passive, they want to engage and be part of the process not just spectators and that is what where the old models all fail. Even government will have to adjust in one form or another, more people are being engaged in politics and being empowered by the internet.
Maybe this is the Borg collective that will take over and it doesn't seems that bad for me at all but some are afraid to death and I kind of feel sorry for them because they could probably end up being the new destitute's of the world while others gain all power and control, they don't know how to play the game and are afraid of the changes that could mean abject poverty to them or at least their concept of it for most people is called "medium class".
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Re: Going out!
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Re: Re: Going out!
Give the fraking pizza for free and make your costumers come back by offering something enticing like the ability to them to make their own recipes and gain from it selling it to people they know.
LoL
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Re: Re: Going out!
Don't sell pizza sell the ability to others to make pizzas, you can give the pizzas for free, what you do charge is for the service of making the pizza for them and they can resell that to others in their communities. Who cares about the fraking pizza?
:)
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The Copyright Wars!
Those licenses give the people the legal power to do what they want and by a legal stand nobody can take that away from you unless they are willing to gut or start adding more exceptions to copyright.
I'm compiling my own list of resources that will enable me to enjoy life without having to see my rights trumped by IP laws and I will share it with you guys in hopes people start using those alternatives to get the freedom their deserve.
Music Alternatives
• http://en.wikipedia.org/wiki/List_of_projects_using_Creative_Commons_licenses
• http://magnatune.com/
• http://www.jamendo.com/en/top
• http://en.wikipedia.org/wiki/Wikipedia:Sound/list
• http://www.opsound.org/
• http://www.opensourcemusic.com/
• http://ccmixter.org/
• http://www.archive.org/details/audio_music
• http://www.archive.org/details/opensource_audio
• http://ghosts.nin.com/
• http://www.locarecords.com/
Free Music (license unknown)
• http://freemusicarchive.org/
• http://www.adultswim.com/music/index.html
• http://en.wikipedia.org/wiki/Adultswim
• http://www.bangingtunes.com/misc/dj-mixes/
• http://amiestreet.com/
• http://www.uaradio.net/
• http://www.legaltorrents.com/
• http://bt.etree.org/
• http://www.mp3.com/
Music Sheets
• http://www.mutopiaproject.org/
∘ TheMutopia Project: Free sheet music for everyone
• http://www.cpdl.org/
∘ Choral Public Domain Library
• http://icking-music-archive.org/index.php
• http://imslp.org/
Music Databases
• http://musicbrainz.org/doc/libmusicbrainz
Lyrics
• http://lyrics.wikia.com/Main_Page
Ebooks
• http://www.gutenberg.org/wiki/Main_Page
• http://www.wikibooks.org/
U.S. Government free photos(public domain)
• http://www.dotgovwatch.com/?/archives/8-The-Best-Copyright-Free-Photo-Libraries.html
• http://www.bestphotos.us/
• http://www.fws.gov/digitalmedia
• http://www.ars.usda.gov/is/graphics/photos/
• http://www.nps.gov/features/yell/slidefile/index.htm
• http://www.nps.gov/archive/grca/photos/index.htm
• http://photolibrary.usap.gov/
• http://www.photolibrary.fema.gov/photolibrary/index.jsp
• http://www.cdc.gov/page.do/id/0900f3ec80112422
• http://www.defense.gov/multimedia/
• http://nix.nasa.gov/
• http://libraryphoto.cr.usgs.gov/parks.htm
• http://armi.usgs.gov/gallery/results.php?search=ALL
• http://fl.biology.usgs.gov/Center_Publications/Image_Archive/image_archive.html
• http://www.nrel.gov/data/pix/
• http://www.usa.gov/Topics/Graphics.shtml
Public Domain Calculator
• http://wiki.okfn.org/PublicDomainCalculators
Public Domain Database(search europe)
• http://www.publicdomainworks.net/
• http://pdmdb.org/
• http://en.wikipedia.org/wiki/List_of_online_databases
• http://en.wikipedia.org/wiki/List_of_digital_library_projects
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Interest Reading a World Without an Employer.
Not really, but a world without the benefits of a steady job.
I like the part of unions where the unions will be responsible for insurance, medical and other things and it will go back to their original roots where they offered those things and didn't do much bargaining but people got together to accomplish things and invested their own resources to make it happen and thus were really free to do as they please inside their own constraints without having to really be begging for anything from others.
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Free
Or the pricing structures are established so allowing for "free" pizza
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Free ?
The concept of price is essentially ability to exchange your efforts with efforts of others in terms of paper money. It forces everyone to contribute to get something in return.
Free pizza or free software, both can be a business strategy. However, it is not inherently right or wrong strategy. Depends on the scenario. For example, try offering free pizza in economically not so well to do places. You would have hoardes of people you would be feeding for free forever. However, in many scenarios, free strategy might be excellent. For example, free gmail accounts in return for relevant textual ads being placed on webpage. This business strategy is good or bad depending on situation.
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Free
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DIY almost free
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