The traditional approach to conducting business is to buy a product and sell it for more than cost. Even service-based companies follow the same model. It’s just that the cost of their staff is a direct cost, instead of an expense like it is for most businesses.
This philosophy has prevailed for millennia, with Ancient Romans, Egyptians, and Greeks all engaging in commerce in the same way. Nations like the United Kingdom and the United States were built off the back of the principle of private enterprise, and for the most part, they all worked in the same way.
However, there are times when your business can actually benefit from giving away your product, service, or even your knowledge at a discounted price, or even for free. While this may seem counter-intuitive to many business people, the reasoning is sound and, when done right, can help drive new customers your way.
Here are some ideas for how giving away things for free can help your business to grow.
Try Before You Buy
One of the oldest marketing tricks in the book is the free trial or free sample. Free trials are usually applicable to service businesses, such as software suppliers, while free samples are typically used by those that sell physical products.
Letting customers try before they buy is a great way to demonstrate the quality of the product or service you’re selling. If you’re confident that they’ll be able to see the value in what you’re offering while undergoing the trial or using the sample, then you’ll likely increase your sales.
There is also an element of psychology at play here. Some marketers believe that a concept called “loss aversion” can help encourage prospects to become paying customers beyond a free trial period, if you can make them aware of the features that they’ll be losing out on.
Examples of free trials can be seen everywhere, from Microsoft’s 12-month free trial of its Azure cloud-computing platform, to Disney+’s 7-day free trial of its streaming service.
Free-Forever Services
Going beyond a time-limited free trial, some companies have moved to offer a completely free service to their customers permanently. These are sometimes known as “freemium” services or, in the context of the gaming industry, “free-to-play” games.
This strategy can be a great way to build relationships with customers who may not be ready to commit to handing over any cash, but that you think will be in the future. It also helps you to raise awareness of your services, since people are more likely to share or recommend something that’s free.
Over time, the non-paying customers can turn into paying customers by offering them premium features that aren’t available in the free version. This is something that Mail Chimp does well. The company offers a free package that includes some of its features and a small number of email sends per month. Customers that start using it for free are regularly nudged to upgrade to get access to the additional tools.
In the gaming industry, many companies are beginning to offer free-to-play versions of their most popular titles, because they’ve proven to be incredibly profitable and immensely popular with players.
For example, PokerStars offers a free-to-play version of its online poker platform where customers receive play chips on registration and then every few hours afterwards. This is enough for the average player, but for those who want to play for longer, additional play chips can be bought through the company’s website. Similarly, Call of Duty: Mobile is a first-person shooter in which users can download, install, and play the game for free, but can also make in-game purchases for upgrades using the COD Points currency.
Conclusion
While giving away things for free may make many people uncomfortable, the reality is that it can play an important role in growing your business. For some, free products and services are a way to demonstrate the quality of your paid-for offering, while others can make a profit from a product that is always free.
