Analyzing the Business Models of Weebly, Yola and Other Free Easy Website Builders
For some one new to Weebly, Yola, WebNode or Other Free website builders, the questions that keep lingering at the back of the mind is: How can Weebly or Yola offer Website builder with so many features, themes and hosting for free ? What is the catch ? Is it a scam ? Is there a hidden agenda ?
Before getting further into details, here is the answer: There is no catch. These are trust worthy businesses built around a very strong business model with a powerful value proposition.
Note: WeeblyForums.com is independent. We have no official relation with any of the free website builders. We do not receive any monetary benefit for writing this. Neither we represent them.
Here, we provide you a glimpse at their business models, how they make money and why they offer sites and hosting for free and what you should watchout. Remember to check the section “Have a Backup Plan for Your Business Website” at the bottom of the article for information about the steps you should take to preserve and secure your business website.
An understanding of the business models will give you the necessary confidence. Be warned, not every free website builder out there is trustworthy. But you can be fairly confident with Weebly, Yola, Webs, WebNode, Jimdo. There may be many others who are trust worthy. Do your due diligence before you trust them with your business website.
Here is how these businesses operate.
So, who is paying ?
If you are not paying, then some one else must be paying for it, right ? Not always. They are funded by individual investors or Venture Capitals. The idea is to increase the valuation of the company and sell it. That is where you come in. Every new user increases valuation. Every free site you publish is marketing their product. Every satisfied customer spreads the word. So, inadvertently, you are saving the company the marketing dollar (a very significant amount) and at the same time increasing its valuation.
The Customer Base
A vast customer base is a potential gold mine. A worthy service offered for free would give these companies the customer base they are after. Companies can leverage their customer base with new revenue generating product and service launches. Expanding customer base is a key business strategy. Remember Skype, Facebook ? Skype has close to 800 million registered users and hardly ever made money. Yet, Microsoft bought it for $8.5Billion. Skype created a powerful brand and an extra ordinary user base. Microsoft did not buy just the Skype product. Microsoft bought the Skype’s Market and the 800 milliion users along with it. Now, Microsoft has an opportunity to attach it with their product offerings and sell services (integrated or independent).
Today’s free users are tomorrow’s paid users. Those satisfied customers will choose to upgrade to paid service. Freemium business model is a well proven business strategy for startups and new businesses and is a success mantra for building relationship with new customers.
Mark ups on Custom Domain Names
A regular reseller pricing for custom domain names from GoDaddy is $8 for .com, .org or .net domain name registrations. Weebly sells domain names at $40 per year, a profit of $32 per year on every custom domain they resell. In addition to custom domains, the mark up on private registration is $5 per year. Yola sells domain names at $17 per year, a little less margin, but significant.
Some providers like Webs serve ads on your site and make revenue. The higher the traffic you receive, the more is their revenue.
Come For Milk. Buy A Coffee Maker, and a Food Processor, and a Camping Kit On Your Way Out
Take the example of Zoho Sites. You start with a Free Site. Then integrate Zoho Creator (or) Zoho CRM (or) Zoho Discussions. For Zoho, the free sites are bringing the crowds in and once you are there, you are likely to buy some of their services and products. Even if Zoho does not make profits on Zoho Sites, it boosts the sales of all their other product offerings. Fortunately for Zoho, all of their products match the needs of the typical Zoho Sites user.
Some of the providers partner with third party companies, integrate their services as plugins and generate commission for subscriptions. The Tal.Ki forum plugin has a very limited free service of 15 topics only. Any thing more than that is a paid service. Same applies to PollDaddy, ConstantContact, BookFresh, AdSense, Custom Domain Registration etc. All these partners offer commissions to the provider. The Weebly’s Google AdSense element shares 50% of the revenue with you. So, if your site with AdSense brings visitors, it brings revenue to Weebly.
Individual and Bulk Resellers
There are basically two flavours of resellers. The first category is small time resellers who provide white label reseller services to tens or hundreds of clients. And then there are bulk resellers like web hosting companies which either sell easy web site builder to their registrants or offer the service in a package. For Example, Weebly’s drag and drop website editor is offered by hosts like iPage, HostMonster, BlueHost, NetFirms, FatCow etc to their clientele. A lot of web hosting companies sell third party solutions at a commission. Though these are a handful of companies, they bring in several thousands of paid customers.
This is a strategy deployed by not-so-good providers. Offer some thing free. But hold back from offering the real thing that customer does not realize when they sign-up. For ex: Yola does not let free users use custom domain registered at third party registrars like GoDaddy. Most customers do not realize the need when they start and simply use a subdomain. By the time they realize they need a custom domain, they have no choice but to upgrade to Yola Silver costing $100 per year. They can not move to a different host because the subdomain can not be forwarded, and the website content is not available for download. They just make the migration a royal pain so that these customers will give in and pay to upgrade. Not every provider adopts this approach. Just some. Watch out. Evaluate your needs ahead.
Some of the Free Website builders, how ever big they may be, could potentially fail and succumb fully or partially for several reasons. Remember Geocities, which was bought by Yahoo, and eventually folded because of lack of a viable model ? What is free today may not be free after the business is sold. The whole idea behind Venture Capital funding is to flip the company and make 20 times the money invested in it. Either the business has to generate proportional organic revenues or the business has to be sold. The new business who buys it, does not care much to keep the promises made by the previous company. Pricing could change. Be prepared to pay and/or be prepared to move. Competition is their biggest challenge. By the time they are prepared to charge every customer, some one else comes along and offers a free service wiping out the bottom line and potentially driving the business to bankruptcy.
Have a Backup Plan for Your Business Website
Take the following steps in order to be able to migrate to different host if your needs can’t be met with the current provider or if provider goes out of business.
- Use a Custom Domain instead of a subdomain of weebly, yola etc. Get your customers acquainted with your custom domain name. Small Businesses spend a lot of time and effort to build relationship with customers. Build your brand with a custom domain name and don’t get tied down with one provider.
- Always backup your entire site with content so you can host it else where if needed. If your provider does not provide a way to backup or archive your site, save your content in text, images etc on your machines in appropriate directories so that a new site can be built using the content. Its a huge effort to rebuild the content for your business site. Ideally, prefer a provider that lets you download your entire site without holding you hostage.
- Stay with reputed and big providers like Weebly, Yola etc which have a strong backing and are hard to fail.
- Know the limitations of the provider you choose. Evaluate your future needs and evaluate if the provider has a provision to fit your needs. And check how much it costs. For example, if you need forums, news letter subscriptions, mail marketing, community and user engagement, then some thing like Site Kreator which costs $19/month all inclusive will be a much better choice than Weebly or Yola which cost you extra for third party plugins like Tal.ki Forum, extra for ConstantContact etc.
Hope it clears up the confusion for some of you. Even the sophisticated paid-only providers like SiteKreator also started as free providers at some point. SiteKreator no more offers free sites. They are mature enough to offer a paid-only service now. That is where every free provider today is headed. Its only a matter of time by when each of the providers pulls the plug on free services or force ads. Be prepared. Remember to check the Limitations of Weebly, Limitations of Yola, Advantages of Weebly, Advantages of Yola to give you a base for what to look for while choosing a suitable provider for you. If you are interested in knowing the granular feature differences between Yola and Weebly, check the feature comparison of Weebly vs Yola.