On my way to writing about pricing tables, Jeffrey (my brother and business partner) shared with a client his thoughts on the use of “free.” I insisted that before discussing pricing in this column he should help me cover the phenomenon of free. After all, shouldn’t we discuss price before we discuss value?
There is true magic in free – you can see it everywhere. It’s hard to discuss free without referencing Dan Ariely and Chris Anderson. Most of the discussions online are about whether free is dangerous. Those discussions are fascinating but they mislead many marketers.
There is an intuitive sense among marketers that free is the perfect price, if only they can find a way to monetize it. The major variations on this theme are free with advertising, free but not fully functional, and free with premiums. Free is so pervasive that an acquaintance of ours whose liquid net worth is comfortably in the seven-digit range recently told us, with a straight face, that he preferred an iPhone app that clearly isn’t as good because it was free. Free or $4.99, that was the choice. He wasn’t scared about losing $5. That is what sent Jeffrey into an exploration of free and what free is all about.
There are two classic uses of free:
Value is how we decide what we’re willing to pay. Value is the relative worth of something. Value is more important than price. Ten thousand dollars might be a lot of money for a watch but how about for open heart surgery? There is a book in us about value. Let’s not get distracted, we’re here today to discuss free.
The price of free is perceived in direct proportion to the value experienced. I’m calling that Jeffrey Eisenberg’s “Rule of Free for Marketers.” It’s not the offer of free that counts, it’s the experience that determines whether or not it is worth more or less than zero. If you sell ice cream, then you don’t need to give this a lot of thought. However, if you sell anything complex enough to require a change of habit, routine, business process, or relationships, then Jeffrey’s rule deserves careful consideration.
Let’s examine the three major variations of free:
As more and more products and services become free, the attention-getting magic of free is declining as rapidly as cynicism is increasing. So please remember that free has a price. Free is not a substitute for creating value in your product or service.
I think Jeffrey is channeling our Abuela’s “I’m too poor to buy cheap.” It’s still good advice, so don’t forget Jeffrey Eisenberg’s Rule of Free for Marketers – “The price of free is perceived in direct proportion to the value experienced.”
The Test Drive of the Organization Optimizer is free. It falls under the second type of Free but not fully functional. The intention is for a prospect to experience how easy it is to answer the survey, and demonstrate why it does what it does. Feedback is appreciated on what you think about the Test Drive.
by Jim Taggart
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