Concept
According to Dan Ariely, the author of Predictably Irrational, the price of free is powerful because it activates our “acquisition motivation” and causes us to perceive something as having a higher value than it otherwise would. Ariely explains that when we are faced with two options, one of which is free, we tend to focus on the benefits of the free option and overlook the costs or drawbacks. This is because our brains are wired to value things that are free more highly than those that have a cost, even if the cost is very small.
Ariely illustrates this point with the example of a newspaper subscription. When the newspaper is offered for $0, people are more likely to subscribe than when it is offered for just one cent. This is because the price of free activates our acquisition motivation and causes us to perceive the newspaper as having a higher value than it otherwise would. By contrast, when the newspaper is offered for even a small amount, such as one cent, people are more likely to focus on the cost and consider whether the newspaper is actually worth that amount to them.
Overall, the power of the price of free is that it activates our acquisition motivation and causes us to value something more highly than we otherwise would. This is a powerful tool that businesses can use to drive sales and increase demand for their products or services.
Application
Offering a free trial: One way that businesses can use the price of free is by offering a free trial of their product or service. This allows potential customers to try out the product or service at no cost, which can help to activate their acquisition motivation and increase their perceived value of the offering.
Giving away free samples: Another way that businesses can use the price of free is by giving away free samples of their product. This allows potential customers to try out the product at no cost and can help to increase demand and drive sales.
Using lead magnets: A lead magnet is a free resource that a business offers in exchange for the contact information of a potential customer. This could be a free e-book, a free webinar, or another type of resource that is valuable to the customer. By offering a lead magnet, a business can use the price of free to capture the contact information of potential customers and build their marketing list.
Offering discounts or promotions: Businesses can also use the price of free by offering discounts or promotions that reduce the price of their product or service to zero. For example, a business might offer a discount code that allows customers to purchase a product for free, or they might offer a buy-one-get-one-free promotion. These types of offers can help to activate the acquisition motivation of potential customers and increase demand for the product.
Further reading:
- Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely
- Free: The Future of a Radical Price by Chris Anderson
- The Art of Pricing: How to Find the Hidden Opportunities to Boost Your Profits by Rafi Mohammed
- Priceless: The Myth of Fair Value (and How to Take Advantage of It) by William Poundstone
Contributor:
Will Bachman
