What Does “Free” Cost?

by Jay Deragon on 11/03/2010

“Free” is a word that gets lots of attention. Buy one and get one free, win a free IPad and other “free” marketing messages surround us on-line and off line. Most if not all of the social sites and tools are “free” for use. But the reality of “free” is that it does cost the user, the buyer and the supplier sooner than later.

With the exponential growth of all things social businesses and individuals have flocked to use of social media as a means for generating new revenue. While the sites and tools appear to be “free” using them wrong can cost you dearly. The data you produce creates cost that far out way any of the benefits of “free things” you use or think you obtained. Yet “free” continues to be the lure that pulls many to an engagement.

Businesses have been trying to combine the two models — giving some things away in the hopes of selling other things while obtaining user data. It’s an idea that had some powerful advocates and some notable success stories. We’ve seen it in retail marketing for years. We’ve also seen it in most business negotiation where the buyer is always trying to get a deal from the supplier (reduced cost or “free” additions of value).

The ultimate game of “free” is to entice the buyer to want more than free offers. The most successful social games never outright require you to spend a dime — but they do make it clear what you’re missing out on. Players are made keenly aware of how much better equipped certain competitors are — and they know that edge is the difference between a free and a paying player. The lure is always in front of you, and eventually it wears down your resistance to the idea of paying for something you’re used to getting for free. But the cost is more than what you “pay”.

Does Money Follow Free?

The games of “free” are always designed to get something of value from those that opt-in for anything and everything for “free”.

Kevin Kelly writesSuccess in the free-copy world is not derived from the skills of distribution since the Great Copy Machine in the Sky takes care of that. Nor are legal skills surrounding Intellectual Property and Copyright very useful anymore. Nor are the skills of hoarding and scarcity. Rather, there are eight generatives that demand an understanding of how abundance breeds a sharing mindset, how generosity is a business model, how vital it has become to cultivate and nurture qualities that can’t be replicated with a click of the mouse.” The qualities are centric to building relationships based on trust.

In the old business models markets were chased and developed based on “mass marketing”. The old business models served the markets with a mindset of “capture and contain” rather than “attract and give“.

In the old business models the predominant influence was from sales and marketing divisions because they had or created the transactions with tricks of the trade. The old system tried to contain relationships by putting “non-compete” agreements on people and heavy handed legal agreements with customers and suppliers, people. You can institutionalize processes but the choice about relations has always been and will continue to be the customer’s free will. The new business models are created and facilitated by the impact of new dynamics created by the virtual world. Technology has fueled connectivity and creativity freely. What an individual or organization creates from all this “free” that enhances value for the relationships is the foundation of transactions that always have and always will follow relationships, with people and markets, existing and those to be created from “free”.

Free is the new input into a developing “system” of relationship connectivity, capital and exchange. The related processes that lead to the results, output, are part of the new business models where the focus is no longer on budgets.  Instead the focus is on how to maximize the use of “free” to create unique value to markets that fuel new transactions.

All of this starts with a new mindset and ends with new economic gains. The new business model and the subsequent thinking is what is and will continue to fuel new markets and significant economic gains for those that get it and losses for those that don’t. However, for those who use “free” to get and use our data the end game will not be significant economic gains but instead a sentiment of distrust. Distrust has always been and will always be the one thing that creates relational separation. Separation creates distance and with distance comes lost opportunity to enhance relations which comes before a transaction.

Someday in the near future the buyer, people, will be empowered to capture the markets data and use that data to their benefit rather than the suppliers. The game will be flipped and buyers will have the power to capture and contain suppliers at their own free will. This will accelerate market changes and consumer power beyond what we are witnessing today.

{ 1 comment }

Blessing February 10, 2012 at 7:18 pm

Part 1 of this sriees, I suggested you look at your existing marketing content to see how you might re purpose this for

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