Can Freeconomics Work in African Markets? [Part 2]

Giving away saddles to sell horses. This is the basic concept behind the ‘free’ business models that I discussed in Part 1. You give away something (time, product, resources) with the intentions of selling something else to make up for it. From my vantage point, the African market is starting to adopt some of these models. Here are some examples…

Freeconomics at Work in Africa

1) Warrid Telecom is one of the newer telecom groups to spring up on a playing-field that’s already crowded with UTL, Zain, MTN, and UTL. One of their recent marketing campaigns talks about a campaign where they will give away a whole day of talk-time if a customer spends any amount with them. In this case they are using the ‘reward’ model to try to get subscribers to leave their competitors and give their service a shot.

2) I was shopping at a local grocery store called Payless the other day when I was approached by a young Indian woman. She told me that this was her shop and that they were running a special promotion. If I spent more than 50,000UGX I would get the opportunity to spin a wheel that could get me prizes. I spun the wheel and won 100,000UGX in store credit. As you may have guessed, this is and example of the ‘credit’ model of free. I’ll now go shopping at this place at least one more time to spend my credits and perhaps again and again with the anticipation that I can win another free shopping spree. If they only do this once a month, they’re building brand excitement and loyalty at the same time which means people will keep coming back for more.

3) There’s a restaurant called Tuhende Safari Lodge here in Kampala. It’s got some of the most amazing food I’ve ever had, which makes it way better than anything else I’ve eaten in Uganda. Given the quality of the food and service, the cost per plate is ridiculously cheap, even by local standards. The average price of a meal at a sit-down restaurant in Kampala is about 15,000UGX. Tuhende has pretty much a set-menu and only charges about 10,000UGX per plate! This place could double their prices and still be competitive. Because it is a set menu, you get a number of additional items like dessert and appetizers at no additional cost. Tuhende also sells alcohol which, believe it or not, isn’t marked up anymore than at other restaurants. Which model of ‘freeconomics’ is at work here? Reputation.

I’m not sure if Tuhende even offers catering but you can believe if I’m planning a special event I’ll approach these guys to do it. If I have guests in town it’s the first restaurant I’ll take them to. They’re making money off the fact they offer premium meals at non-premium meal prices. At some point they may even decide to raise their prices but no one will care. People like the food, they like the service and it will still be the best deal in town.

4) The Eye is a free publication that lists things to do and places to go in Kampala, Uganda. It’s completely subsidized by advertising. It’s free for the public, but local business pay top dollar to have their ads placed within the pages because they know the circulation is so high.

This is article is syndicated from Appfrica.org. Appfrica.org facilitates, mentors and incubates entrepreneurs in software in East Africa and Uganda. Their goal is to offer a physical space with a solid internet connection, servers, software and computers that will allow students and recent graduates a place to develop their ideas in a constructive environment with industry professionals outside of school. For more great articles from Appfrica please visit Appfrica.net.

About the Author
Jon Gosier is an American social entrepreneur and software developer living in East Africa where he's the founder of Appfrica.net a blog that covers African the technology scene. Follow him at http://twitter.com/appfrica
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