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Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc, then offer premium priced value added services or an enhanced version of your service to your customer base.

Fred Wilson has a great post on his favorite business model. It has served Skype and Trillian well. Both went straight into my toolbox when they first launched. Recommended reading for both startups and established organisations.

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