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

Everyman

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Using your own words. More often than not, you are absolutely right.

Would you agree it comes from the fact that 80-90% of people we meet, aren't even vaguely interested in what we do, not to mention, what we want to sell to them. Unless we approach them and start talking to them. Then we may see that, still 80-90% isn't interested, but 10-20% is. But we have to go through the 80-90% to find the 10-20%...

I think it's industry specific. Somebody has mentioned before drug dealing. So low-cost, astronomically high-margin product. It was made to be 'marketed' this way. It might work better or worse in different industries, with different products.

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.
It might build trust actually. Trust is more important than anything else, I think. I don't buy things that I don't trust, don't buy things from companies I don't trust and people I don't trust. I am ready to pay high premium to anyone, who I know is trustworthy i.e. will deliver what he promised in time he promised (even the time is not that important in some cases).

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".
Somebody has already brought up the book "Give and Take". Don't want to duplicate it here. Just a couple of questions. Did you ask him for anything in return? Did you negotiate it before or even during this process? Did you give him 'something small' for free before committing to this huge deal? What was the relationship like before this deal?

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.
You are absolutely right. It's one of the tools to use to 'sell'. Just one of many that should be used alongside others (emailing^^^, cold calling, 'social media', etc etc)... But giving away value for free isn't always bad, it's just not properly used in a specific situation.
 

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maikooo

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Great post! Thank you ...

I fell for this, totally. Worked our a$$es off for a year providing as much value as possible in terms of valuable content on various networks. The plan was clear, modeled after favorite podcasters I followed in the past.
  1. build the community by providing as much valuable content as possible before charging
  2. charge sponsors for the access to our audience and charge the audience for added-value products/services
The biggest risk was only related to the fact that our audience doesn't have much disposable revenue. The industry is prone to it.

Completely dismissed the need for actually validating the need (pun intended). Completely disregarded the fact that our "potential" competitors have this type of content only as part of their outreach strategy. Basically threw my Lean Startup Build-Measure-Learn training out of the window and went head in.

My partner mentioned that we shouldn't focus our business model around this, but I was too swept away by the success of star podcasters getting 10'000 downloads per episode. WTF, they are charging $500/episode, 3 sponsors each, 7 days a week. WTF*2, that's almost $50k/month. Patience and persistence will get us there ... well, after 10 months we barely had <1'000 downloads/views per episode on pod & YT. Ain't nobody pay high CPMs on that one.

Anybody who has tried a content type of business knows that sponsors may try with you out of respect/curiosity and a good pitch but they will only renew if you deliver numbers. The latter was simply not there. The audience doesn't care. We just haven't skewed value towards our offering in an immensely overcrowded industry filled with free content on every corner.

Well, in the end, we made some money to pay the bills, combining all kind of income streams, however, haven't created a system. We failed all the commandments at once.

The lesson is simple; create as much free content as you have resources for and makes sense from ROI, but only as part of your marketing strategy, supporting sales of your offering that addresses tangible pains - either by attracting new customers (SEO, trial) or increasing the perceived value of your offering

The new framework is clear; create product(s)/service(s) that address real pains, provide immediate value exchange ($) and have inherent scalability in them. Content & Community are layered on top of it, not at the core of it.

Hope this helps!
 

Fred Chevry

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Every time Wikipedia begs me for money, I think about this. I can't help but think: "Not my fault if you built something cool no one wants to pay for."

It also feels that many tech companies that survive on investors money preach that modus operendi since they get massively successful despite the math not working. At least in a conventional manner.

Sent from my SM-G925W8 using Tapatalk
 

JScott

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Every time Wikipedia begs me for money, I think about this. I can't help but think: "Not my fault if you built something cool no one wants to pay for."
Wikipedia raises about $50M per year in donations. Don't assume that everyone feels the way you do.
 

James Klymus

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While I do agree that for some businesses, Giving free first would be silly (Like the cookie example you used). But business doesn't happen in a vacuum, and it isnt a black and white thing.

For some businesses it can work really well. Especially when it comes to info marketing and even consulting. For example, when I first started working out a few years ago, A few people I knew talked about Greg from Kinobody having really good programs. So I checked out his youtube channel for a few weeks and saw that he had some awesome content and knew what he was talking about.

He even sampled some of his workout routines on his channel. I ended up buying his "greek god" program and he has a happy customer, because he let me "see behind the curtain" of his courses and I wanted more. And I know greg does very well with his company Kinobody.

I mean even MJ samples his books. He lets you download some chapters for free, and you'll probably buy the whole thing.

It isn't a black and white answer, and of course a bakery giving away all of it's cookies for free is not smart. I even think that particular example is silly. But in some businesses, Sampling the product can lead to sales, like it did in my example.
 

Fred Chevry

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Wikipedia raises about $50M per year in donations. Don't assume that everyone feels the way you do.
Let me rephrase: I don't want to pay for it. On the other hand, I gladly donate to blogs and creators I like. Maybe it's just their begging tone that annoys TF out of me.
 

Mckenzie

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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 shit - 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 recently listened to a podcast where the guy talked about "seeds of discontent" and how charity or freebies can in fact become toxic by leading to complacency, and resentment among the very folks you intended to help. The moment I heard this while running in the morning, I stopped and contemplated on this. It resonates with me a lot when I looking back at my life and those people around me both in personal and business life.
 

MrChill

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I can attest that trying to monetize my YouTube channel with 75k subs is like pulling teeth. People want the free content and that's about it.
Congratulations on working hard and hitting 75k! What product/service and how have you been trying to convert them into paying customers?

I think freebies have a valuable place in the toolkit, when used properly. Costco, a business that most customers absolutely love, give away countless freebies each year in the way of samples. They know that when people are exposed to something new and novel, and that the quality is solid (Costco's corporate buyers don't buy garbage from suppliers), people will buy! The cost of these samples or freebies is nominal to Costco relative to the number of new sales they'll make.

Likewise, Evernote and many other Freemium SaaS companies have such nominal incremental costs to add a "free" user. They know that once I put 100's of notes in their system, I'm not going to easily jump ship when I finally outgrow the free subscription. They know I'll open my wallet for the value proposition of a few bucks for month, given all the extra features and storage I get.
 

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Johnny boy

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My lawn care company:

In the winter I offered free lawn care for people.

Most of them signed up for our premium plan in the spring.

Average profit per contract: $1000 a year + lifetime value if they stay with us.


My web design and marketing company:

Talked to people over the phone in long conversations and gave away all of my best advice for them to grow their business. I’d tell them most of what they were asking me to do wouldn’t actually help and would just be a waste of money to pay anyone for.

They’d send me $1000 for a two hour conversation.


What is content marketing?

How do people become celebrities in the first place?

Why is Gary vaynerchuck bigger than all of the social media “gurus” out there?

Giving for free works. Ask Facebook.
 

itfactor

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May 18, 2019
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A little late to the party.

As a freelancer who is always on the fence on this issue, I think its important to distinguish one fact.

Giving value and demostrating value aren’t the same thing.

Using the cookie store example. Instead of giving away free samples to passerbys, demostrating value can be holding community baking classes for local families.

At the end of the day it’s about identifying what qualifies as value, extracting maximum benefits for both you and your prospects, without reducing your business into a charity.

Also, what makes something valuable can come from the opinion of those that surround us.

Instead of focusing on delivering value to just your prospects (free cookie samples), think about how you can offer collective value to a market (teach families how to bake).
 
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