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FREE AS A BUSINESS MODEL

This pattern is characterized customers are attracted by
by a tight link or “lock-in” the instant gratifi cation of a
between the initial product cheap or free initial product
Cheap or free “bait” lures and the follow-up products or service. The initial one-time pur- 107
customers—and is closely or services. chase generates little or no
linked to a (disposable) revenue, but is made up for
follow-up item or service. through repeat follow-up PATTERNS
purchases of high-margin
products or services.

KP KA VP CR CS
Focuses on delivery
of follow-up products
or services.

KR CH

Bait & hook patterns usually
require a strong brand.

C$ R$

Important cost structure
elements include subsidization
of the initial product and the
costs of producing follow-up
products or services.

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