Is free software really free?

Everyone loves a freebie, but what’s the hidden cost? If you’re using free software — whether that’s in your business or your personal life — be warned that unless it’s a charity, they’re making their money somehow, and it may be worse than just paying a fee.

Aisling Smith·

An illustration of a bearded man inspecting at a dollar sign under a rock

As the old saying goes, nothing in life is free. And, like many proverbs, it remains irritatingly true. When it comes to software, there are a lot of seemingly free products out there — a quick browse on your phone’s app store shows how prolific they are! But these applications don’t just exist to put some good out into the world; businesses are creating them to generate revenue. So why is it that they would offer a free product?

Not paying for software up front usually means one of two things: either that the company is making money off you in hidden ways, or you’ll be compelled to spend money down the track on expensive add-ons or microtransactions. Let’s chat about both of these scenarios.

1. When you are the product

Some kinds of free software out there are extremely concerning. This is the software that you genuinely won’t pay any money at all to use. These ones are truly scary because (as the infamous internet saying goes): if you are not paying for it, you’re not the customer; you’re the product being sold!

The companies producing this kind of software aren’t charging you, but they’re nonetheless making money from you using their product. Think about it: how is that even possible when you’re not paying? It could be that they’re advertising to you, or at the very least, they’re monetising your data somehow. It’s hard to know when this is happening, and it isn’t always something that’s clearly obvious from the terms and conditions when you sign up, but it’s very much a reality and the business model behind many free products. For example, Google may claim that they’ll never sell your data, as they might not directly sell advertisers access to your free-to-use calendar or Gmail account. Nonetheless, they may scan any data that you input using your account for words and behaviour cues, with the aim of serving you targeted ads paid for by third parties.

The rising prominence of Artificial Intelligence (which we’ve shared concerns about before) also poses a potential risk if you’re using software with unclear terms and conditions. You might be aware that Zoom recently came under scrutiny for changing their terms of service to allow the company to train their AI using customer data. While Zoom later clarified that the content of video calls and chats would not be used for this purpose without consent, they conceded that other data (such as feature usage and geographical location) would be used in this way. Consent is also murky in these situations. As long as the meeting host agrees to audio, video or text content being used for AI training, the only option for meeting participants who aren’t comfortable with this is to leave. And that may not be possible in all situations, such as a work context.

Data security is always important — and never more so than when you work in the healthcare space. You’re trusted with storing and securing your patient’s sensitive information, you want to be very sure that any software you use in your practice has their incentives aligned with yours. Hopefully it’s very clear how they are making their money, and that their success relies on them providing great software and service. It’s also worth checking your legal obligations around data storage and making sure that all software you use is compliant with any regulations in your local area.

2. When you can use the basics for free, but need to pay for additional features

One of the other common models for free software is that the base product doesn’t cost you anything, but most of the functionality that you need is pay-as-you-go. In some systems, even basic features are considered chargeable extras.

This way of doing things is sometimes called a “freemium” business plan. Companies that operate a freemium business model have to play a balancing game, where their “free” software has to be good enough that people are willing to sign up, but not so good that there is no incentive to pay for the next level. Too many freemium customers and not enough paying customers is a recipe for major cash flow problems — after all, software costs money to maintain and requires constant updates and improvements. So these companies have to draw a line somewhere and use whatever revenue they can earn from paying customers to fund the freemium version, as well as cover their marketing costs and overheads. That's how they stay in business.

If you’re using software that falls into this category it’s a wise idea to tally up roughly how much you end up paying each month. It’s easy to assume that you’re saving money because the base product is free, but you could be spending much more than you realise. You might even find that the price that you pay is far greater than if you were to use software that has a fixed up-front price!

The pricing systems of these products can also be quite complicated, perhaps requiring you to purchase a variety of non-transferable credits for different features. The credits for each feature might have varied price tags too, which means your monthly expenditure on the software is likely to be quite unpredictable. Your costs could fluctuate depending on how often you use certain features and you probably won’t have a clear idea of how much you’ll end up spending each month.

If you can get value out of only the free parts of the software, this can be a very good choice for new businesses who are just starting out. You’ll then only need to weigh up the cost and effort of changing later if you decide to use different software down the track.

Make an informed choice

We’re not suggesting you never use free software. There are times where the costs (hidden or otherwise) still make it the right choice for you. We’re just suggesting to find out what those costs are, and to make sure their motives align with yours.

We do think you should find out how the companies behind the software are making their money, and also make sure you’re okay with their methods. And when it comes to software you use in your healthcare business, make sure you understand exactly what happens to the information you put in there. You also want to be certain that you own it, and can get it back when needed. As a custodian of healthcare information, you should always make an informed choice when selecting software for your business.

Why Cliniko isn’t free

Cliniko isn’t free — it never was and never will be. But we’ve always been upfront about this. We think that our software is worth paying for, and we aim to add far more value to your practice than what we cost (while still remaining profitable).

Charging a fee allows us to be entirely self-funded, which is a good thing for our customers! It means that we have total control over the direction of Cliniko and we’re not compelled to compromise our values in order to please outside investors or achieve rapid growth. Our motives are aligned with our customers, and we need to provide great software and support for our business to survive. This is likely the motive you want us to have.

We will never trick you into paying for things unexpectedly — when you’re using Cliniko, you know exactly what you’re spending and what you’re getting in return. You can be certain that your data is safe and protected; when you have any questions, you’ll get excellent customer support; and that we’ll always act with integrity. Because, especially when it comes to healthcare software, we don’t think there should ever be surprises.

Author information

Aisling is a Melbourne-based writer and all around word nerd. When she isn't writing for Cliniko, she likes circus fitness, playing her cello, and eating dessert.

Never miss an update! Sign up for monthly Cliniko news and tips.

Read Cliniko’s Terms and Privacy policy

Keep reading