The Cost of Free

Are we so giddy about seeing something for free that we are no longer able to compare the value of the item? Why is it that most people will by a 15 cent Lindt truffle over a 1 cent Hershey Kiss but when the Kiss is free people barely buy the truffle.  If you want to see the value of free review the series of experiments done in the Predictably Irrational chapter called “The Cost of Zero Cost: Why We Often Pay Too Much When We Pay Nothing.”

Dan Ariely believes that we forget the downside of free. That we are so wired to be afraid of loss that the idea of “free” removes the loss – after all it is free.

This ends up being very useful in marketing. Give away something free with a purchase. Buy a computer and get a free printer. Buy $25 of stuff and get free shipping. (How much will you buy that you do not need for that free shipping.)

So when you are trying to sway the purchase decision consider having something free. It makes for such irrational choices and that may your product or service.

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