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NOTABLE! Unpopular Opinion: "Give Value for Free" is Bullshit More Often Than Not

Jeff Noel

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I think this heavily depends on the industry you're in.

A while ago I bought a "premium" version of an audiobook player on my phone because the free version was great and they didn't lock necessary features behind a paywall.

Same thing with the course @Andy Black made that I wrote in his thread.

If he gave so much free value, how good is the stuff he's charging for? Only one way to find out.
I completely agree. Some kinds of business will definitely benefit more from giving value. I'm especially thinking of markets flooded with offers that cannot really distinguish themselves to the eyes of the customers. Free cellphones apps are pretty much the only way to get your developer firm and paid application known... it's pretty much a sales funnel by itself. If the free app is great, people who can afford it will eventually purchase the paid one if they like it. And your name will now be out there.

This is a different kind of "give value" since the free apps usually contain ads or premium currency, but the main content is still available, free of charge, to the users.

Andy is a great example. I didn't know him 3 days ago. Here I am first thing in the morning, doing AdWords search terms and keywords planning, thanks to him. His paid content must not only be gold, it must be platinum with sparkles !
 

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MashaN

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I think this heavily depends on the industry you're in.
Great point.
How much time do you require to spend on a regular basis to give value away?
Content creation - created ones and it gives value away for life.
Baking cookies on the other hand - well, most likely every day. That is assuming you would like them to maintain their value.
 

TylerH1994

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Like nearly everything in life, it depends on the situation. Sure, for some businesses it might not be the best option, but I feel that the free value in the beginning is a wise decision.
 

Jeff Noel

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Netflix offers a free month of service for new customers in exchange million of people
become paid customers
It is a great, concrete example. For platforms and SaaS solutions online (pretty much any service which is cloud-based), using this method is the best way for them to make people addicted to their product.

I'm a heavy Spotify user, and I recently tried its competitor, as an audiophile. That other business is offering higher quality audio streams and lossless format audio... as a streaming service, I was skeptic about it, I wasn't expecting to need better than what Spotify offers, but the 14 days trial got me hooked (especially for holiday, classical music).

They won my money with their free trial. I'm even considering to drop Spotify for the more expensive service in exchange for sound quality, while losing the bigger library Spotify offers !

Great point.
How much time do you require to spend on a regular basis to give value away?
It's definitely something to take into account. Writing a blog article or a few ebooks that you give away for free requires no future time spend or maintenance fees that could show up in a different business. I've never seen a car company giving away free cars every week.
 

MidwestLandlord

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never seen a car company giving away free cars every week.
There's a used car lot in my area that gives away a free $5000-ish car every 2 weeks. His facebook posts get 4,000 or so likes every time, and 100+ shares.

I know him, and he sells more cars than he can keep up with. Has put at least half of the other used car lots out of business. He's very niched (sub $6,000 cars and cash only), and plays big on the "free bucket of chicken" mentality.

To enter the contest all you have to do is fill out a form with your name, telephone, and the criteria of what kind of car you are looking for, plus friend him on Facebook. Then magically, when you don't win, he finds a car that fits your criteria and calls you...
 

Jeff Noel

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There's a used car lot in my area that gives away a free $5000-ish car every 2 weeks. His facebook posts get 4,000 or so likes every time, and 100+ shares.

I know him, and he sells more cars than he can keep up with. Has put at least half of the other used car lots out of business. He's very niched (sub $6,000 cars and cash only), and plays big on the "free bucket of chicken" mentality.

To enter the contest all you have to do is fill out a form with your name, telephone, and the criteria of what kind of car you are looking for, plus friend him on Facebook. Then magically, when you don't win, he finds a car that fits your criteria and calls you...
This business should be scaled nationwide. This man is a genius !
 

MidwestLandlord

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This business should be scaled nationwide. This man is a genius !
And he's in a rural area (town of 13,000...aren't you in a rural area of Canada?)

He has people drive 300-400 miles just to enter the contest. They'll often leave with a car they bought anyway and just tow it home.

Being in a rural area hasn't held him back.

And this "$5,000 car" he gives away? Yeah, he pays like $1,500 for them at auction. Only puts legit book value on them, so not a scam.

He has a local mechanic that does work for 20% off if the car was bought or won from this guy too, so not only is he networking (critical in rural areas IMO) but he adds that level of comfort that his cheaper cars won't leave you with big repair bills.
 

Dami-B

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Great thread. @AgainstAllOdds is a poster I respect and look forward to, but I have to disagree with this post.

In my experience and constant learning as a digital marketer (a world that @andyblack opened up to me through his posts), I believe that you first need to undertand the different touch points of today's customer.
There are four separate touch points

1. Buy
2. Learn
3. Expression
4. Lifestyle

You are concerned about the first stage which is buy. You want to be there when the consumer wants to purchase a product or needs something right away, you want to be the first option. Digital marketers understand this, that's why we do SEO, SEM, Facebook ads to get you there first for a keyword or conceptual ad. But that's just the first step.

Today's consumer does not want to be sold, they hate being sold and often avoid the feeling, but they love to learn, they wonder about different things, that's gen x for you, they don't know anything, but they wonder, so they want to know how to fix a tire, they check out a YouTube video, it's the age of learning, and smart brands are taking advantage of this, see Johnson and Johnson with babycenter.com, a site that teaches you all you need to know about having a baby from conception to adulthood. So organized information is free, but it's an asset they are building, a content asset that creates a community which people will connect to. The best brands position themselves as free information source, at the point where their prospective consumers are looking to learn more about their product, service and industry

But this is just the small part.

Smarter brands know that their customers want to express themselves, in the age of selfies and self broadcasting, we live in an age where people for the first time get to say what their message is for the world and their promise to the world, it's a digital world full of expression and smart brands are finding ways to.get customers to express themselves through their products and services, engagement is the new buzz word and companies are looking for smarter ways to engage their customers, to express themselves, a great example of this is the share a Coke campaign by cocacola

Last but not least is lifestyle, Tom's shoes is the perfect example with the one for one campaign, when you know that for every Tom shoe you buy, a kid goes to school in Sierra Leone, you have just connected with that companies vision, you have connected with the companies leader and you feel like a part of what they are building, my companies goal (my person goal as well) is to have a positive impact on every business I come across through my online marketing service, once my clients can connect with this vision and see themselves part of it and believe in it to the point where they follow my.plan to achieve positive impact in their business, then price doesnt matter, I'v gone beyond the sale to build something that will last.

The sale is just the first part, it's the buying stage, but there is so much you can offer your customers beyond the sale that makes them connect with you like they would never connect with anyone else.

This is my belief and why I do what I do
 
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KLaw

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There's a used car lot in my area that gives away a free $5000-ish car every 2 weeks. His facebook posts get 4,000 or so likes every time, and 100+ shares.

I know him, and he sells more cars than he can keep up with. Has put at least half of the other used car lots out of business. He's very niched (sub $6,000 cars and cash only), and plays big on the "free bucket of chicken" mentality.

To enter the contest all you have to do is fill out a form with your name, telephone, and the criteria of what kind of car you are looking for, plus friend him on Facebook. Then magically, when you don't win, he finds a car that fits your criteria and calls you...
Brilliant!
 

Jeff Noel

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And he's in a rural area (town of 13,000...aren't you in a rural area of Canada?)

He has people drive 300-400 miles just to enter the contest. They'll often leave with a car they bought anyway and just tow it home.

Being in a rural area hasn't held him back.

And this "$5,000 car" he gives away? Yeah, he pays like $1,500 for them at auction. Only puts legit book value on them, so not a scam.

He has a local mechanic that does work for 20% off if the car was bought or won from this guy too, so not only is he networking (critical in rural areas IMO) but he adds that level of comfort that his cheaper cars won't leave you with big repair bills.
Yes, I'm in an area secluded from the big cities.

I'm writing this idea down. I know nothing about cars (except the more performance oriented stuff). I need to talk with a few people that could jumpstart this project here or even closer to bigger cities like Montreal.

My cousin lives over there and is a car junkie, he built a dozen of cars by himself and uses a car scrapyard for parts, where you pay almost nothing, but you need to pull the parts off the car by yourself (see here). I'm pretty sure this kind of project would excite him a lot, and I could definitely take care of the web portion of it with lead pages, CTAs, social medias, etc. He also has a local mechanic fora friend over there, doing mechanical miracles all day long.

You'll hear again from the project if he's interested in that (since he has way more knowledge in the matter than I do). Thank you !
 

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Dami-B

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Brilliant!
There's a used car lot in my area that gives away a free $5000-ish car every 2 weeks. His facebook posts get 4,000 or so likes every time, and 100+ shares.

I know him, and he sells more cars than he can keep up with. Has put at least half of the other used car lots out of business. He's very niched (sub $6,000 cars and cash only), and plays big on the "free bucket of chicken" mentality.

To enter the contest all you have to do is fill out a form with your name, telephone, and the criteria of what kind of car you are looking for, plus friend him on Facebook. Then magically, when you don't win, he finds a car that fits your criteria and calls you...
No one hardly enters a contest for something they don't want. So even if they didn't win a simple follow up on the leads that participated will lead to sales... Brilliant tactic
 

Josh Schmitt

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Agreed. BUT it's not a black & white rule. Situational awareness. In those cases, you're definitely right & it's dumb to not get paid.

What about advertising though, if you can add value in the title of a video, or first 15 seconds.. then people will listen/click.

I feel like the general point that most guru advise is generalized truths. The REAL SHIT is nuanced & more complicated
 

socaldude

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FREE is something very powerful.

Human nature and business is intrinsically tit-for-tat.

I think people are more likely to buy something if you make them feel like they got something for nothing. Especially if it is unexpected.

Starting our generous, especially if the product or service is great can lead to an upward spiral of tit for tat.

Most products and services suck and consumers are aware of this. I myself am very hesitant to buy without doing some research. The free model allows me as a consumer to take on zero risk.
 
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MJ DeMarco

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The free model allows me as a consumer to take on zero risk.
That's the model in a nutshell.

Consumers are tired of being ripped off.

If they get to "try before you buy" the company is saying, "Hey, we know our product is so good, we know once you try it, you won't want to go without it."

Reducing consumer barriers to purchase is simple behavioral economics. Aversion to risk and loss of money is a powerful impetus for people not to make a gamble on a product.
 

ChrisR

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Another good example of this is Sees Candy. No one who walks in there for a free sample leaves without purchased goods.
 

Jeff Noel

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Another good example of this is Sees Candy. No one who walks in there for a free sample leaves without purchased goods.
Reminds me of a high quality chocolate factory that opened here. They have a small shop and there was a long queue of people waiting to get in, in the cold. The boss took a basket and filled it with chocolate chunks. He started going through the long queue, in the cold, wearing nothing but his tuxedo outfit while greeting everyone and talking about his different chocolate types. He probably won 50 recurring customers just by doing that... and got over 500 people visiting the shop that day because of word of mouth from satisfied customers.

That same person has around a dozen of shops now. Free samples at the entrance for everyone.
 

Sebastya

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So let's say you're doing courses - would you give away the first module and make them pay for the rest of the course? OR make one course entirely free then make a paid one and hope they buy that one?
 
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I just want to clarify:

I'm not saying giving away samples is bad, but that the general wisdom that this is the only way to build a business is significantly flawed.

It's a marketing strategy, and for most industries and businesses, a suboptimal one.

Obviously for tech and information based businesses it works really well, but in other businesses (especially service based businesses), it's not necessarily the best road to take.
 

Jeff InfoPreneur

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Most definitely - where many people go wrong is mis-understanding or mis-reading what "value" means to your market. In many cases where you are selling a course, consulting, a solution, education, books, or many other types of products - "value" in the beginning, when you first reach your audience, is "hope"!

Someone has been trying to reach a level in their career for years but is a wit's end because they haven't been able to get there so far...so you produce content that is "valuable" in so far as you share a tip or two that gives them HOPE that you really can help them...that you have the method that will finally help them achieve (benefit) or avoid (Pain) that they have been struggling with for months/years.

When you understand this premise you stop giving away things that YOU believe are valuable and instead focus on giving away (up-front) enough that convinces your prospect that you (your business) can help them further with your paid product or services.

Way too many marketers give their own meaning to "value" to be: $ value of what they are giving, their own interpretation of what is valuable, qty (Ex long videos, books, courses, services, etc...) - these don't matter at ALL...what matters is the degree to which you reach your prospect, convince them you have the shit to help them and give them clear instructions on how to move forward from where they are today.
 

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Jeff Noel

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So let's say you're doing courses - would you give away the first module and make them pay for the rest of the course? OR make one course entirely free then make a paid one and hope they buy that one?
I'd rather give an overview of the course for free (even if it's just a part of a module) than giving the majority of it for free. Most people that are on the brink of purchasing your course are unsure of the way you talk, the way you explain things or just the quality of the content. Showing a short part can often convert these people into sales.

Edit: @AgainstAllOdds Just read your last post and I definitely agree with your point of view. Still, it created a great discussion here ! It's quite interesting to see the different ways this strategy can work, or not, depending on the market/industry.
 

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I just want to clarify:

I'm not saying giving away samples is bad, but that the general wisdom that this is the only way to build a business is significantly flawed.

It's a marketing strategy, and for most industries and businesses, a suboptimal one.

Obviously for tech and information based businesses it works really well, but in other businesses (especially service based businesses), it's not necessarily the best road to take.
For our service business, it's awful.
I would gladly give away the first month of accounting services for free - it lowers the risk and commitment for new clients.

The problem is, most of the work is upfront. I usually need to clean up the financials to even begin doing their accounting. One month of financials means nothing if their starting point is crap. There is a lot of time I eat up front, that only gets made up if they stay on as clients. So for our business, you are correct, giving away our actual service for free doesn't work for us.

However, I can give away content for free all day long (my only cost is my time). It establishes me as an expert, and then when people are looking for our services, we are hopefully top of mind.
That being said, if I actually calculated the amount we "earn per hour" for creating content, it's probably less than minimum wage at this point, hence why we're exploring other avenues of traffic.
 

ProblemOd

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I'm not saying giving away samples is bad, but that the general wisdom that this is the only way to build a business is significantly flawed.

It's a marketing strategy, and for most industries and businesses, a suboptimal one.

Obviously for tech and information based businesses it works really well, but in other businesses (especially service based businesses), it's not necessarily the best road to take.
I never thought of it as general wisdom. I always thought people hated giving away things for free and that most business owners are reluctant to engage in this type of marketing.

There's so many different variations of "giving value for free" that i don't think its fair to group them together and say its suboptimal.

Giving out free samples is way different than becoming an authority through free video content
 

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Okay.. I see where you’re coming from but consider the following:

There are a lot of Authors i’ve bought books from because they put up free articles.

A lot of colleges i’ve taken courses from because they posted free videos

And I just read how tech information samples are different but...

I recently started buying Mocha Frapp from McDonalds ALL the time. I buy them like every day. Why? Because I got coupon for a free one. I tried it and they cost to buy it $2 and they’re just as good as the $7 one I get at Starbucks!

Ha, such a simplistic statement is so true.

If you need no better real world example of a powerful value proposition and a productocracy, the freemium business model is what drug dealers use.

The product is so powerful, they know the more free trials they give away, the more customers they get.
Bingo. People gotta know what you got is good.

Also... It seems reasonable that people would just take the goodies and run, but in Social Psychology we know of a concept called Reciprocity. From a sale perspective researcher Robert Caildini writes extensively about this in his book “Influence.”

Reciprocity can be summed up as follows: when someone does you a favor, you unconsciously feel compelled to return that favor. "We are obligated to give back to others, the form of behavior that they have first given to us."

Caildini referenced the Krishna people at the airports. They give people this free flower then people feel compelled to do them a favor.

I know when someone does a favor for me I feel unconsciously indebted to them and I often can’t wait to return the favor to them. Try and notice this feeling in yourself. Notice how it feels like the scales are being tipped in their favor.

Exhibit A: those little pre-printed address labels that come to us in the mail this time of year along with letters asking for donations.

Those labels seem innocent enough, but they often trigger a small but very real dilemma. "I can't send it back to them because it's got my name on it," Cialdini says. "But as soon as I've decided to keep that packet of labels, I'm in the jaws of the rule."

The packet of labels costs roughly 9 cents, Cialdini says, but it dramatically increases the number of people who give to the charities that send them. "The hit rate goes from 18 to 35 percent," he says. In other words, the number of people who donate almost doubles.


"We are obligated to give back to others, the form of behavior that they have first given to us," he says. "Essentially thou shall not take without giving in return."

And so if someone passes you in the hall and says hello, you feel compelled to return their greeting. When you don't, you notice it, it makes you uncomfortable, out of balance. That's the rule of reciprocation.

"There's not a single human culture that fails to train its members in this rule," Cialdini says.

This is probably because there are some obvious benefits to the rule of reciprocation; it's one of those rules that likely made it easier for us to survive as a species.

But what's interesting about all this is how psychologists like Cialdini can actually measure the way the rule affects how we behave in all sorts of situations.
NRP - Give And Take: How The Rule Of Reciprocation Binds Us
 
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JScott

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I know that this opinion on this forum will be unpopular, and that it goes against what all the gurus teach, but after years of reading stories of misled entrepreneurs, I needed to make a post.

Time and time again I see people following this business model:

Give value for free --> People will eventually start paying you. --> You'll be rich.

The theory preached behind this "model" is that to make money, you have to give people value (upfront). You give them value. They understand your worth. And then if they so choose, they'll give you money.

Ok. Nothing wrong with that. However, I want to point out that this model is nothing more than a funnel. It's a marketing tactic.

It has a lot of pitfalls and potential traps for starting entrepreneurs.

For the majority of businesses, it is not a "business model" that you want your business to be centered around. It is one of many tactics that you want to try out before deciding where to allocate your sales/marketing budget, but not something that you want to bet the house on before looking elsewhere.

The biggest problem with the model is that it comes with the requirement of giving value upfront. You give before receive. In a large number of scenarios that could work, but there's one key point that this sort of thinking leaves out:

99% of people will only give you money for FUTURE value. They don't give a f*ck about what you did for them for free before.

Let's go through an example of a bakery in multiple scenarios:
A bakery wants to sell more cookies. To sell more, they have a person stand outside giving samples away.

Scenario #1 where things go well:
Because enough people try and taste the samples, a few realize that the cookies are good, and end up buying a dozen cookies each to take home. The bakery is ecstatic and considers it a success. They end up building their entire business model around giving away samples for free.

Scenario #2 where things go bad:
People try the cookies. Eat as many as they want. End up buying no cookies because they already got their sweet fix for the day. Tomorrow, or whenever they choose, they know they can get another cookie for free, so they end up buying none. The bakery goes bankrupt and the people feel bad, but not to the point where they'll donate to open the bakery up again; they'll just buy they cookies from now on.

Scenario #3 the default scenario without samples:
A bakery puts great looking cookies in the window. Whoever wants cookies, comes and gives them money for cookies.


Using this example above, gurus will tell you that Scenario #1 is the only way that you can build a business. You need to give value upfront before having a chance to receive value.

Bullshit.

Scenario #3 is the most common scenario for a reason. How many of your local bakeries are giving away top quality samples all the time for free? They might do it once in awhile, but there's little to no chance that they're doing it everyday, and if they are, they're only giving you a taste.

This is the same reason why Groupon doesn't work for most businesses.

Or why all the Youtube gurus like @AndrewNC that make videos for free end up getting zero customers. Edit: Alright, maybe they end up getting two or three and then start calling themselves successful entrepreneurs.

It is merely a funnel/marketing tactic for you to get sales.

But to get sales: YOU NEED TO CREATE FUTURE VALUE.

You need to have a product or service that is valuable enough for people to give you money. The book Ca$hvertising puts it best: For someone to give you $20, they have to believe that the $20 they're giving you is worth less than what they're getting. If they believe they're getting $30 worth of value then they'll give you money with zero hesitation.

The only time you should be giving value for free is when you're attempting to increase the perceived value. If you know your service is worth $30, and you're selling it for $20, but no one's buying, then giving away a TASTE for free is worth it to increase the perceived value from let's say $10 to $30.

But if you're giving value away for free, expecting the customer to eventually pay, then you're mistaken.

I saved a former mentor of mine millions of dollars by optimizing his supply chain. I fell into the trap of giving value away for free, assuming that eventually he would reciprocate. You know what I ended up getting? Not sh*t - because there was zero reason to give me a dollar other than "loyalty".

I have friends that have invested years into the wrong pursuits. I've read countless posts on this forum of people betting their business around these tactics and then wondering why they failed. Time and time again I've seen this model fail.

End of the day, it's a marketing tactic. It is not the only way to operate your business, and more often than not, it does more detriment than good.

You're a freelancer?

What's better? You writing a thousand forum posts here and on Quora? Or you creating a strong landing page and cold emailing a thousand potential clients with a few clicks?

I don't know what's better. That's for you to test and decide. But if you bet you whole business on just one tactic instead of trying multiple until you get traction, then you're an idiot and deserve to fail.

To summarize: Create a valuable product or service. Employ a multitude of tactics to get traction. More likely than not, giving value away for free is bad for your business.
I haven't read the other responses, so forgive me if I'm repeating what others have said...

There is a lot in this post that I disagree with, though I think the overall idea of the post is TREMENDOUSLY important, and there are some very valuable nuggets of truth in there.

Some random thoughts:

- First and foremost, not all "value" is created equally. Some people think they are giving value for free when in reality they are giving crap for free, and don't recognize the difference. They believe they are owed for what they are giving but don't realize that what they are giving is worthless.

- For those that are truly giving value, they are likely doing more than building goodwill -- they are likely building a brand. A brand is valuable (some say it's valuable enough to get you elected President) -- personally, I'd rather have a strong brand that's earning nothing than an unbranded business that's generating profit. I can likely do more with the brand long-term than I could with the unbranded business.

- A small note on the free samples example... There is a very sound psychological principle behind free samples -- it's not just "giving value" or generating goodwill. The idea of reciprocation is the basis for some very large enterprises; entire religions, cults and charities have been based on the principle. I wouldn't knock it.

- I disagree with the reason why Groupon doesn't work for businesses. Groupon doesn't work for businesses because the businesses that tend to need/use Groupon are the businesses that are already struggling for other reasons. Groupon self-selects for ailing businesses, and simply providing a discount on products and services will rarely fix an ailing business (price is typically not the issue).

- I'm living proof that giving away value for free can be the basis of a longer-term business model. I gave away information for years before I started charging for it; I built a brand. And then I was able to capitalize on it. Now, I AGREE WITH YOU that this likely would have been a bad business model to build my business around -- in my case, I didn't plan for it to happen that way -- but, to say it can't be done is just flat out incorrect. Maybe I'm the only guy in the world to accomplish that, but I think we can all agree that I'm unlikely to be the only guy to do anything... :)

- Just to reiterate -- you use the word "loyalty"; I use the word "brand." Don't discount loyalty/brand when it comes to creating something that can generate massive income. Choosing to focus on building a brand versus building income early on is a risk, but in some cases, and it can work out.

Most importantly, everyone should go back to my first point above. The reason why giving value for free most often doesn't work out is that the "value" being given isn't really value and isn't worth anything other than free. If that were the point of your post, think we'd be in violent agreement.
 
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jpmartin

Jedi Master
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Sep 7, 2013
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Because the fundamental product had incredible value.
MJ, I've been debating this topic for a long time, and having read your book I understand where you're coming from. There is an interesting book by Chris Anderson - Free: The Future of a Radical Price

But WHAT you're giving away for free should be kept in mind. If it's something digital, giving it away for free or even a sample of it is at best tiny incremental in cost. Giving a cookie away or a physical sample, is money from your pocket.

Even in the software space, while freemium is good... many are evaluating this freemium cost now. And that's what I'm studying now. For example, some say that customer support for a product is costly, and at the end of the day - very few convert. So they felt that its best to give a 14 day trial and see if they can onboard them. Others just say, pay for 1 month and try us out... if you don't like it, don't continue.

There's another side to this story that's worth reading. Newton Mail (formerly CloudMagic) - the guys created a great product... had around 4 milllion free users, and then decided to charge $49 per year. Guess how many converted to paid (myself including) 40,000. I honestly felt $49 per year was worth it, but many didn't. Their story, they closed shop this year (pls read this).

And because I use other email apps, the next best one was Spark & Superhuman. Spark is 100% free... Superhuman is not (they will charge around $39 per month for VIP, but gotta admit it is dammmmn fast!). So how do you compete with that? Readdle (owners of Spark, sell other products and make money from that)... but how much can you sustain the development of a free product? Was Newton good, yes... it was great imho! Probably on par with Superhuman (except for speed).

Interested to hear your thoughts on this... because today everybody expects everything for free on the internet!
 

Yzn

Bronze Contributor
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Jul 1, 2018
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I run a local convenience store and to be honest your chances of selling me your product increases by 150% if you give me free sample to me and our employees...not because we're cheap but because now we know that it tastes good and others will buy it over and over again.

So I guess the scenario with giving value first is always better, obviously if you have a strong product to begin with.
 

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