There was a giant whooshing sound this month in the capital markets – the sound of nearly $1 billion flowing into the two zero-fee index funds launched in August by Fidelity. For their second act, the firm has just announced the launch of two more funds, a large-cap core index fund and an “extended market cap” fund covering small and mid caps, to complement the Total Market and International products.

Fidelity’s no-fee fund launch was a bold move in the intense price war already underway among passive-investment providers. But was it that surprising, in retrospect? After all, the brokerage already offered a number of passive index funds with management fees under 5 basis points, as did many of its competitors. The other battle front is in trading commissions, where competitor Vanguard recently launched commission-free trading for nearly all ETFs, not just the ones that it manages directly.

Actually, the move toward a free-product business is not such a shock. It looks an awful lot like the “freemium” model we have come to expect in most areas of our digitally centered lives. Are you paying for that Gmail account? What about the app you use to track your daily macros or your step count or your budget?

Offering a free base-level product is a popular – and proven – way of walking new clients in the door. In fact, maybe we should have all seen this coming. In a 2014 article on the freemium model in Harvard Business Review, professor Vineet Kumar summed it up: “In today’s digital era, when the marginal costs of many products are dropping, businesses will increasingly turn to the freemium model.” Passive investments fit the bill.

Once those clients (or users, shall we say?) arrive, the hope is that some portion of them decide to pay real dollars for a higher-value product – in this case, an actively managed fund, a niche passive product, trading services, or the advice of a dedicated advisor. By offering a basic product at a loss, passive investment providers stand to profit from other revenue from the new user.

The bait of freebies is also not limited to pure-digital goods. Amazon has used this loss-leader strategy with great success, taking losses on shipping services and depending on who you ask, maybe on its book sales (as well as the pure-digital Prime Video streaming products.)

Of course, no pricing model is set in stone, and the pricing evolution underway in financial products is almost certainly not finished. Those of us who pre-date the digital revolution may remember another freemium model that has seen changes of late: the free checking account. Indeed, we’ve all become so accustomed to having free checking services that Bank of America faced serious backlash when it announced earlier this year that it was converting a popular no-fee checking account to another kind of account for which the typical user would then pay monthly fees; at the time of this writing, nearly 400,000 people even signed a change.org petition to protest the move.

At any rate, perhaps we should be celebrating the move toward no-fee vanilla investment options. On one hand, at least we all know now where the bottom is. With a clearer two-tier pricing model emerging, marketers and strategists can have some certainty about which way to steer the ship. And for those of us making content – a notably free but valued offering to the clients and users of financial services – the worth of our product hasn’t changed.

Carolyn Marsh

Carolyn has been a freelance financial writer since 2015. She has an industry background, previously working as a risk analyst at a large brokerage and as an investment strategist at an asset management firm. She holds an MBA with a specialization in analytic finance from the University of Chicago Booth School of Business, and is a CFA charterholder. As a freelancer, she writes for asset managers, consulting firms and the occasional university publication. Carolyn is based in Washington D.C.