Comments on: Free Stuff Costs Us Too Much

By: Ian

Ian — Thu, 28 Jan 2010 20:39:04 +0000

I know I’m late to the game, but I’ve got to disagree with Emma here. I can’t recall the technical term, but this is a well documented bit of irrationality in the human brain. If you invest in something, you will be more inclined to use it… even if it doesn’t make sense to do so! You can get people to commit to utterly ridiculous things with it, even if they should know better. It’s got nothing to do with rationality, it’s just one of the kinks in the human brain.

By: Emma McCreary

Emma McCreary — Sat, 30 May 2009 17:03:20 +0000

“Consumers benefit more when they pay for stuff because they actually use the stuff they buy.”

I feel like this is an artifact of the data…look at it from the other direction. If something is free, more people will “try it out” just for fun or for less serious reasons. If something costs money, only the people really interested in it will pay for it to be able to “try it out” (because really, even if you pay for something, that is not a guarantee that it will work for you). So basically paying is a risk that fewer, more interested people will take. Reading a free article is less risk, so on the spectrum, you’ll get a wider range of interested and not as interested people reading the free item. But I think that the very interested people would still use the item whether it is free or whether they had to pay for it. What you’ll see is a lower percentage of people “really using” a free product, but that’s because a higher percentage of people using it were not as interested/motivated to consume the product in the first place. The same number of highly motivated people will use it in both cases, I think.

I don’t think merely paying for something creates motivation to use it. I don’t see how it would. If it does, it’s that kind of guilt-motivation that makes you feel bad you haven’t watched your Netflix movies. If you really wanted to use something, you’ll use it whether it’s free or not, wouldn’t you? It’s just that if you’re not that interested, you won’t pay for it, and I think that’s fine.

I think there is a general problem in our culture with being out of touch with our intrinsic motivation, and that’s why pricing games seem to be able to manipulate people into doing things or buying things. I’d rather not encourage this kind of thinking and rather encourage people to become deeply in touch with what they want, and then go for it, and then the price wouldn’t matter or motivate them, because they are motivated by their own purpose and goals.

Emma McCrearys last blog post..When Comments Bring Up Your Stuff

By: David Dittell

David Dittell — Fri, 29 May 2009 21:20:07 +0000

Havi's point is most famously referenced in regard to mosquito nets, where those who pay are more likely to put them up (and avoid malaria) than those who don't (the validity of this research is often questioned/refuted/re-proven). It's a very interesting character trait; to factor in what we've put into something in the past, rather than only look at what they can do for us now and in the future. One other point: Time is also a cost, for both the producer and the consumer. This is why, despite content being given away free, there's a level of difficulty in keeping your reader. Always make sure that what you're offering is worth the cost, even if it's "free." David Dittells last blog post..Play Well With Others

By: kball

kball — Thu, 28 May 2009 15:57:44 +0000

Great post, thanks! One of the beautiful ways that 37signals works, and that many online companies have started using, is to have a basic version of their product available for free, and then charge incrementally greater amounts for more features or greater capacity. This has a number of benefits: First, it allows those who truly need very little to have something that is actually free. Second, it reduces the barrier to trying the product; I'm much more likely to buy something if I've already tried it and like it. Third, it is wonderful marketing; no salesman is better than a satisfied client, and even those using the free product will happily advertise it. This allows for a nice middle ground between purely for-sale (even on micropayment) and purely free content. kballs last blog post..Lots of time to think

By: Nick Cernis

Nick Cernis — Thu, 28 May 2009 13:03:38 +0000

Really thoughtful and intelligent article, Charlie. Good job! I especially like the psychological angle you touched on here. There certainly is a heightened feeling of value when you've had to part with cash for information. Of course, it also raises expectations! I'm going to start experimenting with micropayment more on my own sites -- hope to share the results soon. Nick Cerniss last blog post..Give Up and Buy an iPhone

By: Michael

Michael — Thu, 28 May 2009 12:08:40 +0000

Really interesting article, and thanks for pulling the various threads together.

I’ve been one for giving content away for a while (for a bunch of reasons, some clear and strategic, some accidental, some probably neurotic), and I’m suspecting that I’ve “trained” my list to expect free stuff and not bother with the paid content.

And yes, it’s tricky. As you point out, we’re trying to
- save the world
- get people to do things differently
- make a little money.

Perhaps it’s useful to bear in mind that even the Grameen bank, banking for the poor, charges a little interest and creates structures that means the users of its services have some skin in the game.

Michaels last blog post..Great Work Interview – Kevin Wilde, CLO of General Mills

By: Alex Fayle | Someday Syndrome

Alex Fayle | Someday Syndrome — Thu, 28 May 2009 09:50:12 +0000

I think that even with micropayments a good portion of the day still needs to be focused on marketing because your current contacts won't buy everything from you and as a newer business I just don't have enough people in my lists to convert. With a typical conversion rate of 2% to make a living using micropayments the network needs to be pretty darn big... For example, with a network of 10,000 (pretty difficult to achieve and yet still very small) - to earn a basic income of $40K per year, you'd have to convince 2% of that 10K network (wouldn't always be the same 2%) to buy 50 $4 mini products. That's a lot of work developing products as well as a lot of work building up the network. Would it be better to create a bigger ticket item and then focus more effort on marketing to draw fewer people in? I don't know... Alex Fayle | Someday Syndromes last blog post..Expose Your Somedays: The Next Lab Rats Casting Call

By: Martin D K

Martin D K — Wed, 27 May 2009 23:30:07 +0000

Interesting article, it has made me think about where the value in free is. Here are my thoughts on the topic. Is the actual cost of something always equal to the value of that thing? Quite clearly the answer is no. The purchases I get most satisfaction from are those that return more value then their cost, so free can be valuable. I judge free things the same as gifts. My definition of a gift? Gifts are given to say "thank you" for the relationship, and I expect nothing in return. The person who receives the gift has two basic responses. Values the gift, and will continue the relationship, or doesn't care for the gift and the relationship will go no where. So free is a way of creating relationships. If the relationship is strengthened by giving freely, then peoples trust will grow stronger. People are much more likely to buy from people they trust. Putting it together. I don't think consumers benefit more if you charge them. I feel sellers benefit when they give free stuff, it helps create a relationship. Martin D Ks last blog post..What Motivates you?

By: Deb Owen

Deb Owen — Wed, 27 May 2009 17:12:57 +0000

What's your take on Seth Godin's position that 'free' will eventually morph into providers paying people to take something to try? All the best! deb Deb Owens last blog post..being too nice (or when being nice is self-destructive)

By: Charlie

Charlie — Wed, 27 May 2009 15:58:50 +0000

@Christy: I’m glad you brought this up, as it’s the weaker point of the idea that I didn’t bring out. Absolutely, free stuff can and should be a means to an end. I’m also not saying that ALL content needs to be sold, but that content producers should consider producing smaller, more cohesive products that they sell for much less, rather than spending months (!!) building the audience and credibility to sell a larger product.