- Supply – Costs are going down dramatically. The marginal cost of delivering information is very close to zero.
- Demand – Consumers behave radically differently for a free product than for even a very small price.
The demand side is what I’d like to discuss today. Free has many different meanings. Buy one get one free is very different from a free sample. A free sample is Genuinely Free, while buy one get one free is really only a 50% off offer. Genuinely Free is just that, something you can get without having to open your wallet, but more importantly it’s something you get without having to give anything (time, energy or attention) in exchange.
Free is possibly the most powerful word used in marketing, but it is used in so many different contexts. There are free trials, free TV and radio if you watch the commercials, free “lite” versions of software, free blogs, free email and many more. Not all of these are Genuinely Free. If we want the windfall of free, we need to offer products as close as possible to Genuinely Free.
I can think of four reasons a person or company would offer a product or service Genuinely Free.
- Altruism – This person or company simply wants to help others.
- Trial – Free samples will allow someone to try your product in the hopes they will purchase it later.
- Exposure – Writing blogs and giving away valuable information is typically done simply to build a reputation for the writer. The hope is that when the readers need something related, they know where to go.
- Build a network – 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. They can make money by charging for more services. (They also sell advertising which is addressed below.)
In each of these cases, the focus was on the giver. Why is this person giving something away? Because they get something in return. (In the case of altruism they get good feelings knowing they helped others.) The great thing about each of these is that although the giver gets something, the receiver doesn’t have to give anything. Thus, Genuinely Free.
Although many firms offer products for “free”, they aren’t really free.
Advertising based business models are pretty close to free. 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 a software package which will be taken away in 30 days if they don’t buy it. This is different from a lite 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 lite version costs them very little.
Free is a powerful word. Unfortunately it is sometimes deceiving. There is nothing free when you have to buy one to get one free. Consumers are savvy and quickly see through these tricks. If you want the impact of free, make it Genuinely Free.
Action: Can you think of something you can give away for free? Genuinely Free? Which of the four reasons listed above can you use to justify your Genuinely Free offering?