Free is a dangerous thing, particularly to young entrepreneurs.

Our society has made young people feel as though their skills aren’t developed enough and that they don’t have enough experience, thus what they offer is somehow less valuable. So, in order do to things we love, we feel compelled to do them for free – to offer our services for free.

In this post, I’m going to talk specifically about how offering free services actually hurts sales (in terms of finding takers) and in what situation free is actually a very good thing to encourage future sales.

Imagine you’re a parent of a child. You see two listings online for babysitting. Both listings have the same years of experience in babysitting, both are certified in first aid, and both are perfect strangers to you. One listing charges 20 dollars per hour for babysitting, one says they do it for free.

Which babysitter seems more credible, trustworthy and someone you’d be more willing to entrust with your child and which one seems the more likely kidnapper?

The one that charges is the one that seems easier to trust, and free one seems to be the one to raise the most questions. We’re meant to be wary of free.

Why is that? In the mind of a buyer, free raises questions about what the seller’s agenda is. By charging, it’s very clear what benefits a seller gets from offering their services. Free, on the other hand, doesn’t make clear why you’re doing what you’re doing. It also makes what you’re offering seems less valuable somehow.

Photographers and models, even when they don’t charge, never work for free. In that industry TFP/TFCD (trade for pictures/CD of pictures) is extremely common for up and comers to build their portfolio. TFP makes it clear what the benefit is to the model/photographer.

If you’re offering to do things for free, take a lesson. Maybe you’ll notice nobody is taking you up on your free offer. The solution is simple: don’t offer things for free – offer things for motive. Be clear why you’re not charging, but state how it benefits you. You’ll find people are less suspicious and more willing to take you up.

So when is free a good thing? Simple – when what’s free isn’t a service, but rather a product.
You’ll have noticed that you still find plenty of business out there giving away freebies. Free product samples are a fantastic way to start a relationship with a potential customer and maintain a relationship with an existing customer. Particularly in an age of online shopping, free samples and free gifts with purchase get people poking their head in to see what you’re products are about.

Take, for example Lush. I love Lush – the stores themselves are an experiential buffet to the senses. I try all the products and buy the ones I like. But how does Lush recreate this for their website customers? Simple: they always include a free sample of a product based on what the customer bought previously and what they’re looking to promote in the future.

This does two things.
1. Free samples create a familiarity with a product. I’m therefore more likely to buy that product now then when I was unfamiliar with it.
2. Free gifts create a psychological need for reciprocity. There’s a psychology to selling and part of it is the human need to reciprocate. That means if you give me something for nothing, I feel as though I owe you, we’re friends and we’re linked. It creates loyalty within a customer. It strengthens the relationship.

Here’s the tricky part: after multiple orders, I start EXPECTING a free sample from Lush, because they ALWAYS put one in. If I don’t have it, I feel as though I’ve been duped, looked over, or neglected. Had Lush been more random with their samples, or gave samples for special occasions (first purchase, large orders, birthdays etc.) or randomly, this wouldn’t be the case. There’s a point where the payoff for free starts declining – so be aware of this.

The psychology is tricky – but if you can master it, it’ll yield rewards.

Tags: Free, products, samples, selling, services

This entry was posted on Thursday, September 17th, 2009 at 11:23 am and is filed under selling. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.