Why should people pay when they can get it for free?

One of the most common question people ask me is: "why do you think people will pay for your software when they can get it for free?". Just to put things in context, I'm working on an Eclipse based tool. Eclipse is free and many of the Eclipse plug-ins are free. People working in the Eclipse ecosystem are used to getting stuff for free. So, for me, this question becomes extremely relevant, even though there isn't a free tool that can do exactly what I offer.

I wrote a few posts in the past about giving software for free and the added costs of using free software, including:

• When will the "free edition" work?
• Should I offer a "free edition"?
• When saving a buck actually costs you more

A great post by Bob Walsh over at 47 Hats blog explains why you can still sell, even when your competition is giving it for free. It's worth reading (and I should add it's a good blog altogether).

Bob discusses ways of making yourself more competitive by reducing the Total Cost of Ownership (TCO) and by making your software and your site more approachable. The emotional side is a strong topic. I would have to add that, plainly, making your software cool is a great factor here. Take the iPod for example. Sure, you can get a cheaper player. But the thing is so freakin' cool. This is a stronger factor when you sell to consumers (B2C), but it will also help getting end-users on your side and eventually convincing the manager he/she is making the right buying decision.