Marketing April 14, 2010 Last updated April 14th, 2010 967 Reads share

Free, an assumption too far?

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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.

Barney Austen

Barney Austen

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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