Why Freebies Might Not Be as Great as They Seem

The perceived value of anything you may get for free is zero.

Getting “freebies” is a popular method to attract “customers” without them having to pay.

I am saying customers in quotes because a customer is someone who buys goods or services. If he doesn’t have to pay for it, it’s difficult to talk about a customer.

How does a giveaway normally go?

• The seller prepares an item, either an existing one or a new item, especially for the giveaway.
• The seller decreases the price of the item to zero (0) for the giveaway.
• To get the FREE item, the user shares something with the seller in the giveaway. The “something” is usually an email address, phone number, or other personal information. It can also be as simple as a like, comment, or mention.

The objectives of these giveaways may differ, but usually they fall into the following categories:

• Lead generation, market research: the seller gathers information from potential leads, that can be turned into real customers.
• Boost social media reach/increase website traffic: the seller exchanges the item to increase their online presence and brand awareness.
• Product or service promotion: the seller gives away a free item that is related to what they are offering.

There are some problems with these tactics

Any time a seller offers a freebie, they may get an increase of interest, but the interest is not necessarily related to the offering, much more to the fact that they may get something for free.

Imagine this:

A seller has invented a kitchen product but hasn’t tested the market yet. Instead of spending advertisement money to test it on the market, he decided to do a Product or service promotion giveaway to get information about how many people would like to buy the item.

Everyone who signs up for the giveaway receives a gift, a can opener.

People will sign up just to get the gift, with no intention of buying the main kitchen product.

The seller may believe his idea is validated, spending money on development, but ending up with a product that doesn’t sell.

Imagine another situation:

A seller sells video courses. For the giveaway, he decided to share a video course for free, that normally sells for $99.

The seller believes he will be able to turn these “customers” into buying his other courses, but the majority of users will never even use the “free” course. The conversion from a free user to a paying user for a different product will be difficult.

Another even bigger problem may occur: People will start questioning the initial price. Why is it $99 if it can be shared for free? Is it really worth $99?

How do I know this?

I have done it before. I participated in giveaways, with the sole purpose of receiving the free item.

After receiving the freebie, sometimes I even forgot I got it, I never opened it and I don’t even care. If it’s free, there’s no loss if the item is never used at all.

And you probably did it too.

Even some VC-backed businesses try to lure in new users using similar tactics — when you sign up, you receive a T-shirt, a hat, or a mouse mat, …

If the objective is to acquire as many users as possible quickly and cheaply, giveaways are one of the most effective tactics.

The problem is when you try to turn these users into paying customers.

The perceived value of a free offer is zero.

Be careful, it may also affect your other offers.

Is your paid offer related to the freebie? If yes, how does it differ? Why would anyone want to pay for it, if they already have a free version of a related product?

If the main offer is not related to the free offer, how do they know what to expect from you? You would need to convince them your main product is worth buying.

Don’t be discouraged to try

It’s okay to have giveaways, but be realistic about the outcome.

• Giveaway participants are not customers (yet)
• The interest in your giveaway is not directly connected to the interest in your main offer.
• The perceived value of something free is low.