Should You Give Away Your Product for Free?

Should you give your product away for free? Consider the Wikipedia entry for freebie marketing: “Freebie marketing, also known as the razor and blades business model, is the concept of either giving away a salable item for nothing or charging an extremely low price to generate a continual market for another, generally disposable, item.” Seems temptingly simple, doesn’t it?

The concept of free isn’t new and it’s actually not that simple. There are different models for free, including the razor blade model made famous by King Gillette; cross-subsidization; which somehow (magically it seems) shuffles cost among related products or consumer sets; and “freemium,” which provides free basic usage, but then charges for upgrades. This last model can require an alchemist’s touch, however, because you must pick the right break points and really understand the conversion process (what, for example, is the tipping point for users upgrading to a “Business Plus” or “Executive”  account on LinkedIn?).

In recent years, many marketers have been fascinated by free. Chris Anderson of Wired fame wrote a book entitled Free, but his controversial argument seems to fall apart outside the digital world where information, not tangible product, is the thing of value. When you hear “free eBook,” do you feel the same instant excitement you’d feel if someone said “free iPod?” Of course not. Seth Godin, another deep thinker on the issue of free, recently wrote the following on his blog:

In an attention economy (like this one), marketers struggle for attention and if you don't have it, you lose. Free is a relatively cheap way to get attention (both at the start and then through viral techniques). Second, in a digital economy with lots of players and lower barriers to entry, it's quite natural that the price will be lowered until it meets the incremental cost of making one more unit. If a brand can gain share by charging less, a rational player will.

What this says to me is that business is becoming a game of chicken. Company A will sacrifice margin to get more attention so it can stay alive to sell more product. This is an exhausting, but true scenario today. So let’s go back to the question about whether you should give your product (or service) away for free. I’d say no, there’s another way. Perhaps the answer is a hybrid that both Chris and Seth would say is reasonable: charge whatever you want for your product or service – treat it as a commodity – and focus your business instead on earning the most valuable asset businesses trade every day: trust.

Is trust really valuable? If you don’t believe me, check out Francis Fukuyama, whose book, Trust: The Social Virtues and The Creation of Prosperity, argues that the U.S. has historically been a “high-trust society” but that the erosion of that threatens our very economic security. We live during a time of tight supply chains and even tighter margins, and risk is everywhere. Is my food safe? Is that product well-made? Will that marketing initiative really work? When health – business or personal – is at stake, will you turn to the best price or most trusted? I’d say you’re much less likely to leave a product or partner behind because of price difference if the relationship you have with the brand or individual is based on trust, not price.

Your trust is more valuable than your product. Give that away freely, but not cavalierly. How? Start by listening to and engaging with your customers and clients. And don’t be that company that’s talked into “using social media” to sell. You won’t build trust that way. We use a methodology, FUSE, which forces us (our clients) to see themselves through the eyes of the customer. We look for ways to freely give away trust in exchange loyalty. We look for areas where a trust deficit exists and recommend ways to fill that deficit with honest, relevant, ongoing and valuable assets (I don’t say content, because I fear the word content has been cheapened to pablum status).

Don’t give away your product or service for free. You have something more valuable to give away: trust. But don’t blow it, trust is more perishable than you think!

-Contributed by Scott Bauman. Follow him @sbauman