There Is No Value In Free – The Dangers of Giving Stuff Away

It can be tempting, especially when you are first starting out, to provide products and services for free. The reasoning behind this is simple – you get your offering out there, people can use it, hopefully like it, and then they’ll come back for more, be willing to pay for it, and even tell their friends how good you are.

Whilst this may work with a very few products and services, for the vast majority of SMEs it’s one of those apocryphal notions that should be taken with a pinch of salt. In short, free is not quite the great marketing tool that many businesses and entrepreneurs have been led to believe.

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There Is No Value In Free – The Dangers of Giving Stuff Away

At The Last Hurdle we generally don’t provide our services for free. Yes, we do donate our services for our charity but then we get a lot back from working with them. We have in the past provided the odd service for free to certain individuals whom the desire to help was stronger than the need to generate income. The lightbulb moment at how little this was valued came when having a conversation with a number of peers including a recipient of FOC services. I mentioned the recipient are a client and the person responded with ‘I am not a client. Well I guess I am kind of…’ all this time and effort we have given has 0 value to this person!

The truth is that if you provide services or products for free then you are sending a signal out to your customers that you have no value.

Free is more often than not treated with lower regard than a service that is paid for. Let’s say you have an online platform for learning a language. If you offer it for free then customers are actually less likely to engage with it on a long-term basis. If you charge for your service, because they have invested their own money in it, customers are more likely to use it regularly. They’ll learn better and, assuming you have a good platform, are likely to come back for additional modules, spread the word and become a long-term fan. Bottom line when we pay for something we are more inclined to want to get the full value from it. Another example we have seen with free networking events: they get a lot of people sign up to them, but they also get a lot of ‘no shows’. Not only do these missing delegates not value the event, the vast majority don’t inform the organiser they are not coming. Even if the fee charged is a token gesture, it will create far more ‘buy in’ than a free one! The same goes for products and services.

Is Free Really All That Bad?

Plenty of businesses offer things for free. Free shipping, free consultation, free trial and so on. You can access useful information here on this blog, all for no cost. The point is that our free blog is designed to show you that we are a great company to deal with and that we know what we are talking about. The blog has value in creating new customers and demonstrating our credentials. As well as allowing the odd rant 😉

Many digital resources such as online tutorials and cloud based marketing platforms offer a trial period so that you can use the system for free before you decide to buy. And, of course, you often see supermarkets offering buy 1 get 1 free deals.

There is a place for ‘free’ but it needs to be done with a great deal of thought and reluctance if you want to be paid what you are worth.

Setting a Bad Precedence

Giving away things for free eats at your bottom line.

It defines your place in the market – usually somewhere lower than you want or deserve.

You provide a level of expectation that leaves customers wanting more in the way of freebies.

It makes it difficult to put up your prices in line with what you are really worth in the future.

You damage your reputation as a provider of high quality services or products.

On the whole, giving stuff away free has very little effect on growing a customer base – once you start charging your proper rate, they are more likely to head elsewhere for a cheaper option. Whilst it might seem a tempting proposition, you should set the value of your service or product and stick with it. Good customers generally look for a good service and are willing to pay a reasonable amount for it. Dishing out freebies at best will mean customers take you for granted, at worst it could seriously devalue your brand. Use ‘FREE’ with caution!

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Comments

There Is No Value In Free – The Dangers of Giving Stuff Away — 3 Comments

  1. I must wholeheartedly concur with your advice. My developer skills include Linux, PHP & MySQL with CMS applications such as Joomla, WordPress, Magento etc. Within such development you have GPL licensed ‘free’ give away code.

    The model of GPL rests upon people wanting enhancements and paying for support. This model is now broken due to ‘free’ carrying liabilities. Take, for example, someone purchasing a laptop with free anti-virus being included. Consumer law now has it that the ‘free’ is part of the purchase contract and as such the free anti-virus must be fit for use. If the consumer gets a PC virus then they may have rights of recourse to the supplier of their laptop. The supplier may then roll this liability back onto the supplier of the free anti-virus.

    The GPL terms of the free software may not legally limit the consumer rights so there is a liability created when no income is present to support it.

    ‘Free’ always had liability because one size does not fit all. Expectations are always created when a potential user decided to use your ‘free’ something. You may have no opportunity to advise upon, and perhaps change or customise, your software or service. The prospect, which could be substantial, then has a disappointing experience which could have been avoided if they choose another method, modification or customisation to meet with their needs.

    I suggest that ‘Free’ is a bad fit in the modern day world of instant answers. It does not permit a fuller experience and better consultation of the end users’ needs.

    Kind regards,

    Anton Hinxman

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