Is it ever a good idea to give away your product or service for free?

It’s likely that most people would be reluctant to give away their product or service for free, since there will have been costs involved in making the product or service available. Common objections to giving away for free might include concerns that it would devalue your product (If people want it they should pay a fair price for it!). And yet, the concept of the “buy one get one free” has become a widely accepted mechanism in the supermarket shopping experience; you feel that you’re getting something for free, even though a BOGOF is just an alternative way of saying half price. The emotional response which it triggers in the purchaser is more positive than a price discount by appearing to provide a greater, more immediate reward.  So, if a BOGOF is acceptable, when is it ok to offer free giveaways?

The most appropriate time for a giveaway is when you want to encourage potential purchasers to try your product or service for the first time. It won’t devalue your product, because if you’ve priced it fairly the customer will receive goods or services which are worth the original, waived price and will feel prepared to pay in the future. If it’s right for them and their customer need has been satisfied, in the short term it will not be a profitable relationship for the seller, but it might possibly be the start of a long term series of transactions, and if the customer becomes an ambassador for you, they’ll help to spread the word about you on your behalf.

A trial or test phase is recommended by Eric Reiss, the author of the seminal business book “Lean Start up”.  He urges new entrepreneurs to “Test, Refine, Improve”.  It’s during the Test phase that it is certainly worth giving your product/service away for free, because you, as producer, have much to gain from the opportunity which you’re giving to your customers. They may not pay you in cash, but they will be paying you with their feedback and the time that they spend with you, from which you can identify the true customer need, and alter your offering accordingly in future. This kind of self-interested generosity mimics the natural world. Plants are happy to direct their energy towards producing fruits to tempt birds and other animals to eat them and spread the seeds they contain. The plant shares itself through fruits and is spread more widely as a result.

You can spread your idea by offering it for free, and it may be a particularly effective strategy when you are targeting users of a competitor brand or service and you’re keen to encourage them to switch to you. If your offering is genuinely superior, a free trial is ideal for demonstrating that.

My advice would be to be generous and give away when you’re able to, but do it on your own terms.