In his best selling book Predictably Irrational, Dan Ariely asks a simple question, “What is the cost of no cost?” Dan and his team of social scientists did some experiments on a group of potential customers to find out how much they prized different types of chocolate.
On a table in a large building they offered two types of chocolate. The prized Lindt truffle was offered along side the common Hershey’s kiss. The truffle was priced at 15 cents and the Hershey kiss was priced at a penny. Both of these prices were less than half the usual cost. There was a large sign at the table that said “One Chocolate Per Customer.”
As you would probably expect, the Lindt Truffle was a runaway hit at 15 cents. Over 73% of the respondents chose the higher priced truffle over the generic Hersheys kiss. But what happened in the next test was very interesting.
Dan and his testers then lowered the price of each Chocolate by a penny and ran the test again? This time the Truffle was priced at 14 cents and the Hershey’s kiss was given away free.
The results were startling. Now the Hershey’s kiss was the favorite by a wide margin. Over 69% of the respondents now chose the kiss over the truffle and the difference in the test was one red cent.
The difference was the word free. Free made all the difference, especially when compared to an item with a cost associated with it.
As Dan alludes to in the book, this comparison of a free item to an item that we have to pay for can lead us to make irrational or poor decisions. How many times have you chosen the buy one, get one free item only to get home and find it was not the quality you expected.
Let’s say you went to Walmart to buy tee shirts. You usually buy the national brand that doesn’t shrink and holds up well wash after wash. On the same rack is an inferior brand, but the large size package is priced buy one-get one free. Your mind instantly picks up on the deal even though you have to buy two and end up spending more for the large package of shirts.
You get home and after one washing, the inferior shirts shrink 20%. Now you have two packages of shirts that you cant wear but once. The power of free caused you to make a poor decision.
The word free can drive traffic but often relegates the item to something of little or no value. On this blog for example, I provide many free MS Word based templates for a variety of uses. I don’t use the word free but instead use words that explain the benefits.
Instead of Free Flowchart Template, I refer to my flowchart cards as a Five Minute Flowchart, letting the reader know that the flowchart can be created on their desk in under five minutes.
Given the premise that the word free is a powerful motivator, would people be more interested in a free offer or the benefits of a product or service?
Here is a question: What offer would you choose below?
A Free Flowchart Template emphasizing the value of “Free”
A Five Minute Flowchart emphasizing the benefit of “Speed”
Both of these links and graphics point to the same flowchart page. Which graphic would make you click first? The one with the free option, or the one with the time saving benefit?
I would like to hear your comments on this.
I’m going to track this in my stats and see which one is more popular. If you have a minute click on the graphic you would choose. I’ll post the results in an upcoming post in a few days. It will be interesting to see how predictable this choice is.
Question: Free or Fee?