When Free Makes You More Money

Way back when WiFi was first becoming popular and all these businesses came out with plans to charge people monthly subscription rates or huge hourly rates and somehow expected to make money, a few people pointed out that the added expense of managing all of the billing and customer support probably outweighed all of the revenue from users. It would appear that one local WiFi operator now agrees. WiFi Networking News is reporting that MetroFi has done the math and is opening up all of their hotspots for free. They note that cutting out the customer acquisition costs and billing-related costs were adding up. However, by replacing the little bit of revenue they were making from subscribers with advertising revenue from a lot more subscribers (and the lower costs), they actually end up making a lot more money. It's not that surprising when you understand how all the factors play together, but it still seems like a good case study for those who got so angry claiming it was impossible to make money from "free."