Why you can’t give something away for free

As Terry Benedict stated in Ocean’s 12: “Nothing costs nothing”. This is a bizarre phrase in this day and age. It’s seems like everyone wants something for free, and most companies are trying to figure out a way to do that. If you have ever tried to give something away for free I’d be willing to bet that it was much harder than you thought. That’s because Terry Benedict is 110% correct, and here’s why.

Pricing is all about intrinsic value. Do you value your $30,000 car more than your free app? Of course you do! Whether we realize it or not, we directly associate a product or service’s worth with what we paid for it. There are of course outliers -- IE: Google or Angry Birds who are making us pay in many other ways and do their jobs so well that we do consider them valuable -- but, for the most part, this rule is true across the board. Whether you are hosting a first event or creating a new company, asking someone to use your product for free is pretty much pointless because you are essentially telling them that it is worthless. Why would they want to use something that is worthless? They wouldn't, of course!

This is not to say that you can’t offer a good or service for free, but let your customers know that this is a promotion and be 100% transparent about what the usual cost is. In this way, they can get excited because they are getting to try something of huge value for free (possibly spreading the word for you because they are so stoked), and you are getting someone on board, with the assumption that they will one day have to pay. So next time you are planning a new event or launching that new app, don’t give it away for free, go with a “pay-for” model and give free trials if need be. This will assure that your users see immediate value in what you do.

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