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“Free” Is a Price

Like me, you probably run across online services or apps that offer a minimal description of the tool and no price information. Instead, you're simply invited to download something or sign up and try it for ten days or a month, then decide whether you want to keep it. At that point, you learn the price.

“What do they have to lose when it costs them nothing?” is the operating assumption here. A free trial may involve user effort, a risk of wasted time, and a possibility of disappointment. Such information-poor offers are lazy and imitative, not smart because they lose users who prefer to have a clear idea of what the item can do, how it works, and what it will cost after the trial. They also lose users who dislike the implied obligation set in motion when they take advantage of something put forward to them as free, and others who worry about becoming enmeshed in something they can’t easily extract themselves from.

Never forget that we live in an economy and a culture where “There is no such thing as a free lunch” and where most of us, when offered something at no cost, realize that there is probably a hidden downside to the exchange to compensate for a price of zero. You could see this principle operating on the Travel Channel show “Trip Flip,” where host Bert Kreischer went out on the street and offered couples a free three-day adventure trip. Many people ostentatiously evaded Kreischer and his camera crew, refusing to engage with them at all, so suspicious were they of this proffered deal.

In the case of “Trip Flip,” in exchange for going on the trip of a lifetime, all expenses paid, they needed to agree to go without having the exact destination revealed in advance as well as to have the whole junket be filmed for broadcast. There was also implicit - and perhaps explicit - pressure from the producers for them to participate in activities some people might view as risky, such as bungee jumping, waterskiing, or white-water rafting. Of course, viewers normally saw the couple being thrilled to pieces with their no-privacy adventure vacation, but that doesn’t mean there wasn’t a cost to this unusual free offer.

It’s just a short jump from free offers to money-back guarantees, and it’s interesting to see the influence of cultural norms there. On the one hand, some consumers gleefully invoke guarantees at the slightest excuse - and even for no good reason at all. In 2018, the outdoor outfitter LL Bean canceled its 106-year-old lifetime satisfaction guarantee. As a company spokesman explained to customers, “Increasingly, a small but growing number of customers has been interpreting our guarantee well beyond its original intent. Some view it as a lifetime product replacement program, expecting refunds for heavily worn products used over many years. Others seek refunds for products that have been purchased through third parties, such as at yard sales.”

On the other hand, my conversations with a broad swath of the population over business issues have also shown me an opposite attitude, a strong reluctance to ask for one’s money back even in the most egregious circumstances. Their feeling is that if you consumed it, you need to pay. These are the folks who would not feel right about sending back an entree they didn’t like at a restaurant or returning a gadget that stopped working after they put it to use. When a marketer characterizes an offer as “risk-free” because the person could return the product or simply ask for a refund for service within, say, the first 30 days, these people will not spring for the deal. They prefer to research their options, read reviews and ask questions and live with the consequences if they make a poor decision. Asking for their money back would go against their moral view of themselves.

Undoubtedly there is a personality component as well as a moral element operating when people don’t feel justified in invoking a money-back guarantee or even in insisting on getting exactly what they paid for. Some years ago, while an unusually frigid winter was forcing homeowners and building managers throughout the Northeast to grapple with snow-loaded and leaky roofs, I read about a young woman in Boston who was putting up with a constant drip of water along the inside walls of her apartment. She had covered her furniture and belongings with plastic, worried about mold, but was reluctant to “bother the landlord.” She had sent messages about the problem, but she did not believe it was appropriate to insist on a fix or to withhold rent.

If you regard a free offer as a “no brainer,” you are overlooking the range of feelings about free deals in our society and seriously fooling yourself. For many people, free is not risk-free, and “you can get your money back if not satisfied” is unappealing rather than tempting.

In the next lesson, discover why - surprisingly - a higher price can be more beneficial to the buyer.

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Written by

Marcia Yudkin