This is what I heard this past Friday when I followed up on the status of a potential speaking engagement. The firm initially reached out to me in January about the possibility of me presenting my signature talk, “Financial Success Doesn’t Start in Your Wallet.”
Yes, I was disappointed I wasn’t selected. Especially since this is a firm that’s been on wish-list for years. But that disappointment lasted a nanosecond, because there are some things I don’t do for free. And I certainly don’t try to compete with free. That’s a lesson I’ve learned the hard way.
For another nanosecond, I wondered who said yes to doing this depth of work…for free. I was curious: were they a small firm like mine or were they a larger institution; what’s the design of their business model; what’s the role of speaking in it; and what was covering the “cost” of them doing this for free.
“For Free” is Not New
Of course, I’ll likely never discover who said yes. However, that really doesn’t matter.
What does matter is that the reason for their “no” gives you and me a chance to talk about a practice that’s been around for centuries, but has really altered the business landscape in recent decades.
According to a report by NCH Marketing Services, “…it is widely agreed that Coca-Cola issued the first coupon for a free glass of Coke in 1887.”
Giving away products or enough of it is a proven marketing strategy. It can help consumers assess and confirm if what you are selling is truly what they want. This applies whether it is a free glass of Coke, or a pink spoon of ice cream, or sample sizes of make-up or perfume, or trial-offers.
There are two sides to the free coin: consumer and business.
And the question for those times when you are the consumer, as well as when you are the entrepreneur/small business owner offering something for free is this: Are you clear-eyed with how “free” is getting subsidized?
When you are the consumer, do you think about what the value is of something you get for free?
As an entrepreneur or small business owner, are you strategic about the three “Ws” when it comes to if you should offer something for free: when, whether, why?
Free is a Price
When I work with my coaching clients with businesses, one of the exercises we do is evaluate their offers – products and/or services. We break down their offers to identify the “job” of each offer. From my perspective each offer has both an outside job (i.e., with their prospects/clients/customers) and an inside one (i.e., is it a lead generation offer, a signature/pillar offer, or something in between). And we look at the “job” of each offer relative to its price, individually and collectively.
One of the goals of this exercise is to get a birds-eye view of the price range of your offers – from free to low to mid-range to high. And to understand your “costs” associated with each offer – from innovation, production, and delivery and execution.
An exercise like this quickly reveals that a high-priced and high-cost offer shouldn’t be available for the price of free.
In my case, being a speaker for hire is one of my pillar offers, and my costs associated with my speaking engagements are high on all fronts – innovation, production, and delivery and execution. It’s why I feel both comfortable and confident saying “no,” when someone asks me to speak for free. It’s also why I really appreciated the fact that the firm didn’t even ask if I’d be willing to do it for free.
But lest you think I’m anti-free, I’m not.
I provide content like what you are reading, my blog and podcast, and the Financial Wheel exercise for free. I view these as channels that help to build brand awareness regarding my perspective when it comes to the intersection of money, business, and life. Particularly, my speciality of helping people navigate complex financial scenarios and decisions. They also help with lead-generation.
I also don’t charge for discovery calls. These help a prospect to understand the approach I take to my work and why, and for us both to assess if we are a fit for working together.
A Word of Caution
Like I said, giving something away for free is not new. But at some point, a shift occurred and within this shift the fact that there is a price to and for free got lost.
Just think about how many times a day you go to Google or YouTube in search of an answer to something. You can perform unlimited searches 24/7 and yet never pay for a single search.
Or, for those of us who are active on any social media platform, think about how we don’t have to pay to engage with our followers or those we follow.
Sure, we don’t pay in dollars, because in these scenarios we are the product. But we certainly pay a price – it’s in the form of our attention and data.
And I think in some instances, the cost of free got disconnected from the price of the underlying product or service. Since some larger businesses have been and continue to be willing to absorb the “cost of free,” an expectation has flourished that ALL businesses should, too.
So, my fellow business owner here are my parting words for today:
There is nothing wrong with providing products and services for free. HOWEVER, be crystal clear about the following:
- Know why you are doing it. Is it: to qualify a fit, to experiment and test the appetite for and get feedback on an idea or product, or part of a short-term route to your long-term strategy, or something else?
- Be sure you are not providing for free something that has high costs associated with it – especially if those costs are fixed. And I’d add: be sure it isn’t something you’d actually sell at a high price. This is where the adage, “Why buy the cow if you can get the milk for free,” applies to business. 🙂
- Know your boundaries. Is it something you’re willing to have available for free forever, or is it free for a limited time (e.g., trial-periods).
- Is it a gift – either for loyalty or for spending more (e.g., buy 4, get one free).
Here’s something else to consider: What’s your litmus test for understanding how your prospects, clients, and customers perceive the value of something you are offering for free. Do they appreciate it? Or, do they feel entitled to it? Be very wary of the latter.
Ultimately, my friend, please remember this: Free is a price.
Somebody is subsidizing it! And whilst it can be an important marketing strategy, make sure you are not competing with free. Because that’s a losing proposition that extends far beyond the money.