Saturday, December 4, 2010

The Business of Free Stuff

Giving away free stuff seems to go against the main purpose of a business - to grow and make profits. It's somewhat counter-intuitive that a company could gain or benefit from giving its customers something for free. Companies have interestingly found ways to be able to give away items for what is perceived as free, but ultimately does end up costing the consumer in some way.

(1) We'll give you free stuff if you remain loyal to us.

Anybody who has ever gotten the fifth sandwich free after getting a card punched four times knows about this one. Another example is the free airline ticket after you've accumulated a certain number of airline miles.

The most ubiquitous example is probably the free cell phone you get when you sign up and promise to stay on a mobile phone plan for two years.

(2) We'll give you free stuff if you pay attention to us (advertising)

This one is a little more subtle, but Google uses this one. You get to use Google's Search engine (a service really) for free, their maps are free, and all the other products are free. Quite remarkable when you think "when was the last time I used Google products (probably daily), and when was the last time I wrote a check to Google (probably never). Also, when at a convention, have you ever stood in line waiting to talk to the booth representative, so you can get yet another cheesy water bottle that you will never use ?

The most painful example of this category is the "get a free weekend getaway and listen to us for 3 hours harp on you to buy a timeshare". OUCH.

(3) We'll give you free stuff if you try it - and please spread the word how good it is.

Some of the fast food chains gives a free food item (fries, taco, milkshake, burger, whatever) when they're launching a new item - so you can experience how good it is. Photo labs used to give away free film so you would try their film processing. The toy in the cereal box is another example. My previous blog on the grand opening of the Movie Theater was a great example of a "free trial" at a soft opening of a new business. It definitely got me to try

(4) We'll give you a chance at really good free stuff if you give us your personal data

One Word: Sweepstakes. You know them. You love them. You have entered in them, and you never won any of them. The only thing you got was more junk mail. Ha ha.

(5) We'll give you free stuff because you're famous and we want the public to think you are associated with us.

Ironically if you want to really get great free stuff, become super rich and famous. When you no longer have to worry about whether or not you can pay for stuff, it automatically becomes free (sometimes). Donald Trump once stated that he can't count the number of times he's been offered a free meal, just because the owners were happy that he came to their establishment. Donald probably paid the bill anyway, because he is a truly classy guy.

I hope someone comes up with another scheme for how to make money in a business and still give away free stuff. We all love free stuff once in a while.

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