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Free, an assumption too far?

Most of us in business have offered free “stuff” to our potential customers to try and entice them to purchase our products. From a free glass of wine with a dinner to holiday vouchers with a major purchase. On the surface, these are great sales and marketing techniques to be used to gain customer recognition and traction – provided that they are carefully managed.

Free, value,

But is free always the right thing to do?

A major concern is when does “free” become the norm and do we, as business owners, correctly assess the impact of running a free campaign. Why not simply ensure that your business is offering a real value proposition in the first place.

Good value and good quality= Satisfied Customers.

As someone involved in the e-commerce space, it amazes me that we as consumers expect things to be “free” on the internet and are baffled as to why they should ever have to pay for any on-line product.

Where has this come from?

Well Google has contributed largely with its offerings such as Google docs, free email, analytics etc. But in reality, this is not free. Many businesses and consumers part with considerable cash through Google for this privilege.

The most prevalent area where customers feel that free is a right is in the area of hosted web-based applications. They don’t have to download anything, simply click on a button and sign-up with a few personal details to get them running on their product of choice. i.e. it’s reasonably hassle free and maybe this is where the expectation of free comes from, perhaps its all too easy.When was the last time you walked into a shop and said “I’d like to try that out please and sure if I don’t like it, I can drop it back into you” – the shop would go out of business pretty swiftly.

Many customers who sign up for free do not actually end up paying for any element of the service. They can also be the most demanding of the time and attention of the business owners. By not parting with cash, they don’t need to think before signing up for a service and what it means for them and this generally makes them more liberal with their opinions on what is good or not so good about a product or service.

People who pay for a product or service more often take the time out to make sure they understand that purchase is suitable for their needs before buying and are therefore more likely to get good use out of it.

Oh and it costs money to provide the product in the first place. Development time, planning, management, hosting etc. This money has to be recouped somewhere in the chain otherwise the business doesn’t stack up.  Some companies offer their products free online because their business model is geared towards providing this as a side-line to say consultancy or they are funded by advertising and sponsorship. The difficulty is that, if all businesses were offering on-line products funded by on-line advertising, the margins would disappear very quickly.

I am not advocating the removal of free – absolutely not. It plays a strong part in any business message, but it does need to be considered and controlled. It is highly unlikely that the expectation of consumers on-line of things being “free” is likely to be changed anytime soon.  Businesses need to understand this and ensure they have protected themselves against it, otherwise why are they bothering?

Would love to hear your views and experience of free.

Budding entrepeneur working on software product solutions for business. My background is mainly operational and senior management roles in mobile telecoms and software houses. Areas of expertise include professional services, out-sourcing, team management and general operations management. I've made the conscious decision to create my own company having spent the last 20 years learning in the corporate world. In my contributions to this forum, I will share some insights and learnings that I've picked up along the way and hopefully they will be useful to some or all!

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  • Hi Paul. Informative post and very relevant to those who should/need to start delegating so that they can progress their business.

    I would also add that delegation also gives the person receiving the task a personal sense of satisfaction. It is always nice to know that you are trusted by the boss to do something on their behalf and that this can only help them in their career if they take it on board (assuming it doesn’t all go pear shaped of course!).

    It benefits everyone. Management/business owners are given the freedom to think more strategically while the operational aspects and responsibilities are handed to those who can only gain from insights and learning they won’t otherwise get.

    Sometimes, ti is too easy to simply say “I’d do it better myself”. You may be able to – but what other aspects of your business are suffering as a result.

    It takes courage to delegate, but done properly, it will engender a great team spirit.

  • Delegating tasks and responsibility is a vital component of Time Management and also Stress Management. The primary reason most people delegate is to decrease their workload, which enables them to focus on other tasks and responsibilities. I also agree with what Barney wrote in his comment, happy boss + happy workers = a nice place to work.

    I really enjoyed this post Paul, well done.

  • Great question and it’s the one thing that holds so many managers back. The best thing to do first of all is start to put a value on your time. That is – how much are you worth to the business; put an hourly Euro value on it. As a business owner you’ve only one real job to be doing, and that is to develop and grow the business. If you’re doing work that is outside of that remit then you’re holding the business back. When you put a Euro value on your time (let’s say it’s €100 per hour), you’ll then be asking yourself would I pay myself €100 per hour to do this task that I’m thinking about delegating? The thing is, if you’re doing the work, you’re not developing the business. It’s a habit we all need to break at some point.

  • Fully agree Barney, you’re exactly right.

  • Thanks Catherine, and Stress Management seems to be coming more to the fore at the moment as managers deal with the consequences of downsizing.

  • Hi Barney,

    You bring up good points. If you look at all the talk about free, I do not think it was customers demanding it. It was the industry pushing this as a tactic and everyone followed. Now customers expect it and you are right it will not go away.

    Unless what you give away has a purpose and is part of your strategy to make money it is a waste of time. I guess it comes back to understanding the buying behaviour of your customers to see how to make it work for your business.

  • Hi Barney, great post! I agree, the culture of free is unlikey that it will go away any time soon, I suppose a key point here is to use it for advantage rather than for the sake of it. I think Susan’s point about it needing to part of a strategy to make money is well made.

  • Hi Barney,

    Offers and giveaways have become the norm online, you’re absolutely spot on.
    It started off as an incentive to buy online (cleaner and cheaper for companies). It then became the norm as companies copied companies and the concept of buying online became crowded and fiercely competitive.
    Consumers expect free and discounted offers online. They wait for them, so timing is imperitive.
    It also dilutes the product or service offering – as you say – It’s almost too easy to accept. Therein lies the most powerful message for online retailers… it’s simple, its free/cheap, don’t think about it too much…. just buy, buy, buy!
    One motto: Why pay for something, when you can have it for free!

    Cheers for the read Barney, Nice one!

  • The precedence is set, and will continue in my opinion.
    I think it began as people were very unfamiliar with online software. Normally software represents a significant investment, so rather than lose a potential customer, a free trail is a great way to win them over.
    I agree with the recipients of free stuff being liberal and not putting huge effort into learning the package.
    The jury is out Barney, as you say, free cannot be taken away.
    But I strongly feel that freebies should not be used to entice customers, just to get the business – they will definitely fall into the 20% of the 80/20 rule and be costly clients.
    Diluting a service or product is a no-no and as you say needs to be managed properly, or we will all suffer as providers.
    Thanks for a great post btw 🙂

  • Hi Barney,

    Really interesting article. We give part of our software away for free and then charge for certain “pro” features. Our motivation for the free aspect was that it allowed us to get a heap of publicity online that we would never have been able to get if we went the traditional advertising / PR route. However, you do raise alot of the more negative aspects of the free model – demanding customers who haven’t purchased etc. It can be difficult to get the balance right – what to give free to get people to try your software/ what to charge for to make a purchase a compelling option.

    Thanks for the interesting article,


  • Hi Susan. Thanks for your comment. I think you hit the nail on the head in the last point you make about understanding the buying behaviour and working that in your business.

  • Hi Niall. Thanks for the comment. As you say – if it’s part of a strategy, it’s all good. It’s when it becomes a bit of an unchecked beast that it poses problems!

  • Thanks for the comments Elaine. I agree – it is hear to stay. What is needed is to ensure that it is used appropriately in business to engender loyalty rather than market grab.

  • Hi Catriona. Thanks for the comments. Free can bring publicity and it certainly can work to generate profile etc. I hope you guys have got the balance right 🙂

  • Anonymous

    Chris Anderson has a very good book on this very subject ‘Free : The Future of A Radical Price’

    I wrote the following quotes down after I read it:

    (The Issue) – “Attention and reputation are the currencies most in demand, with the expectation that a sufficient amount of either will turn into money someday, somehow.”

    (The Solution) – “The way to compete with ‘free’ is to move past the abundance to find the adjacent scarcity.”

    Food for thought in there.

  • Great post Barney, I must admit there is always a part of me that’s wary of plenty of free online offers, I’m always scanning the fine print for the hidden charges 😉

  • Anonymous

    I’ve actually just got the audio version of Chris Anderson’s book that you mention (free on iTunes incidentally). I’ll have a listen and leave another comment when I’m finished.

    I had an interesting experience of FREE recently. I got a free audio version of a book, during a special Twitter offer on After listening to the book (The Four Hour Work Week), I enjoyed it so much that I went out and bought the paperback version on Amazon.

  • Anonymous


    Great post! This is something I think about a lot too! Like many of the comments, “free” is here to stay. There is a careful balance in using free offerings to build a tribe (Seth Godin) so they want more. It is dangerous when people start (maybe do already) feeling that they are entitled to all that you offer without paying for any of it. When you shop in a brick and mortar shop, there are actual people. Online, interactiosn are largely automated. It’s easy to forget that there are people with needs like food, shelter, and other living expenses.

    Managing “free” is going to continue to challenge us and it doesn’t seem to matter what industry you are in. It has to become part of how we strategize.

  • Great quotes Gerard – thanks for sharing them. The solution is more definitely food for thought and marries up very much with the underlying value proposition I would suggest.

  • I must look that up on iTunes Frank – obviously worthy of a listen. The example you give of free is excellent – it really does depend on your business as to how to work it I think. Thanks for the comment.

  • Hi Elli. Thanks for reading and great comments. You are exactly right when you say it needs to be part of the strategic decision making process.

  • Anonymous

    just listened to the prologue yesterday evening on my home from work and it’s good stuff.

    One example he gives is the “free model” that is being used by game developers on the iPhone. Basically they create a game, it is free initially in that you get the first few levels at no cost, but if you want to go beyond the first few levels you have to pay up.

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