Free and Freemium go-to-market strategies are here to stay because anyone can do it and it a great way to establish a community of enthusiastic users. And if you are really savvy, you create a network effect such as eBay, Craigslist and Monster.com achieved in their respective spaces.

Freemium can come at a cost though. Customer expectations are set by the industry as a whole, not just your company. If users are used to free, it is hard to shift them to a different mindset. This is particularly true because incentives to keep the community are often very weak in these models and there are competitors at each turn waiting to introduce an innovative feature that your community can’t live without.

Aaron Leevie, the CEO and co-founder of Box.net, recently stated that he loses more deals in a sales cycle to his own company than he does to competitors because people don’t see why they should start paying. My interpretation of that statement is that you have to go to market with a clear value proposition that is supported by a business model that can achieve solvency. What’s the ROI? Watch out for companies that defer the profitability discussion until later because they just might not figure it out.