4 Ways Giving Consumers Something That’s Genuinely Free Can Help Retailers Profit In The Long Run

"Free" has many different meanings, and it is used in many different contexts, but free has a lot of weight when it is used in marketing. In an interesting book called Free: The Future of A Radical Price, best-selling author and Wired Editor-in-Chief, Chris Anderson, posits that consumers behave extremely differently to get a free product than they behave to get even a very low-priced item. The book says that businesses profit more in the long run when they offer free products and services to customers.   

There are free trials, free TV and radio (if you tolerate the commercials interspersed with the programming), free "trial" or "test" versions of software, free blogs, free email, and many more. Of course not all of these offerings are Genuinely Free, so if we, as marketers, want the benefits from customer behavior for something free, we need to offer products as close as possible to Genuinely Free. 

Genuinely Free

Genuinely Free is just that, something you can get without having to give anything in exchange -- such as time, energy or attention.

A Free Sample is Genuinely Free.  (But buy-one-in-order-to-get-one-free is really only an offer of 50% off).

Why would a company offer a product or service Genuinely Free?

1. This company really, sincerely wants to help others. (Altruism).

2. Free samples allow someone to try your product in the hope they will purchase it later. (Free Trial).

3. Providing valuable free information, i.e. tips, hints, answers, is typically done to build a reputation and awareness of the company, with the hope that when the consumer needs something, they will remember where to go. (Exposure).

4. Some businesses are more valuable to the customers when there are more users. For example, sites like LinkedIn and FaceBook require millions of users for them to be successful. By offering a lot of value for free, they can build their network. Then they can make money by charging for more services, or by selling advertising.

In each of the cases above, the action was instituted by the marketer, who is giving something away in order to get something in return. The great thing about each of these cases above for the receiver is that, although the giver gets something out of it, the receiver doesn’t have to do anything, but accept it, Genuinely Free.

Although many firms offer products for “free,” they aren’t really free:

What's "pretty close to free," are advertising-based business models. The customer is exposed to advertising in exchange for receiving entertainment or information on TV, radio or the Internet.

Free 30-day trials of software seem free, but they really aren’t. The user must invest the time and energy to become proficient at using a software package, which will be taken away in 30 days if they don’t buy it. This is different from a simple version of software which is Genuinely Free. If you go to the iTunes App store you will find thousands of Genuinely Free applications. The providers of these applications are hoping you will upgrade to their full version. Giving away the simple version costs them very little for what they can get in return.

Takeaway

Free is a powerful word, but it doesn't always mean Genuinely Free. If you have to buy one to get one free, there's nothing free about it. If you give consumers something to try out, and they have to eventually purchase or return it, it's not free. Consumers know the difference. So if you want the impact of free, make it Genuinely Free.

I suggest you think whether there's something you can give away for free. Genuinely Free. And how would you categorize your actions, based on the reasons above for offering something for free?  

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Mark Stiving

About Author

Mark Stiving is a San Jose, Calif.-based pricing expert with 15 years' experience speaking, writing, coaching and consulting to help firms increase profits through value-based pricing. He is the author of Impact Pricing: Your Blueprint for Driving Profits; he blogs at PragmaticPricing.com and shares pithy thoughts on Twitter using @MarkStiving.
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