Comments on: FREE! But at What Price?

By: Indian Gypsy

Indian Gypsy — Sun, 08 Feb 2009 08:03:00 +0000

I think this study is quite intersting but was wondering if there are any other studies done on this topic or issue?
About how the word affcts ppl?
Can someone help me out?
A reference or a name of the study or something?

By: Jon

Jon — Thu, 16 Oct 2008 21:47:00 +0000

Analysis omits the opportunity cost of committing $7 to doing business with the specific agent. Thus, "$10 for zero" is actually more rational than "$20 for $7."

Silly goose.

By: Tim

Tim — Tue, 10 Jun 2008 07:33:00 +0000

I seem to be in the minority because I would go for the $10 gift card at a $1 than the $20 dollar card for $8. In fact I fail to realize how the later is the superior gift since you're only paying 10% for the $10, while paying 40% of the value for the $20 one. Maybe my failure also explains why some, but not all, people go for free since it may be based on an unconscious relationship of perceived value. Thus paying nothing for something will always be better than paying 35% for it.

By: Jeremy (PsyBlog author)

Jeremy (PsyBlog author) — Tue, 29 Apr 2008 14:57:00 +0000

Paul, yup that's what they found, plus we seem to behave more positively towards free things as well.

By: Paul Sweeney

Paul Sweeney — Wed, 23 Apr 2008 13:50:00 +0000

Isn't this all about the power of the downside in the decision? i.e. "you can loose the $7 if you don't like the product, or they don't have it, etc. etc." Free has no downside (other than your time, and attention). The "gifting" of the $10 is a great point. This means that you are probably compelled to use it. Thus the "free" got you to change a pattern of spending or behaviour, to experience the service, and might have been worth the marketing cost.

By: Jeremy (PsyBlog author)

Jeremy (PsyBlog author) — Thu, 17 Apr 2008 07:56:00 +0000

Michael, thanks for the pointer - interesting article.

Growing Freedom, I'm not sure why you think people's behaviour would change if you used those goods. Surely 'free' would still have power?

By: Growing Freedom

Growing Freedom — Wed, 09 Apr 2008 12:43:00 +0000

I think Dave and miehen are onto something. And while I agree with the authors that the buying something for free in these examples can be seen as irrational, I do believe there is some unmentioned reasoning going on. As miehen hints, transactions are 'irrational' in that they are also about the relationships involved. Gifts vs. trade involve differing emotional engagements.

I'd like to see the study repeated with must-have items such as food, shelter, or water. Or stock-pile-able items such as canned goods, firewood, or direct deposits. I think the behavior will change in these cases...

By: Michael Meadon

Michael Meadon — Sun, 06 Apr 2008 12:17:00 +0000

Very interesting post. It links up quite nicely with Chris Anderson's Wired piece on free being the future of business: http://www.wired.com/techbiz/it/magazine/16-03/ff_free?currentPage=all

By: JussiR

JussiR — Sat, 05 Apr 2008 12:35:00 +0000

One thing to notice: when you get something for free it's a gift, when you pay for something (no matter how little) it's a trade. Thease two things have very different meanings in human society.

By: Jeremy (PsyBlog author)

Jeremy (PsyBlog author) — Sat, 05 Apr 2008 12:26:00 +0000

Dave, I'm sure you're right to a certain extent. But the problem with this explanation is that it doesn't quite get to the heart of the findings here.

If what you're saying explains the effect then in the second scenario everyone should choose the $10 gift card costing $1, because then they're only out $1 (compared to $8 for the second option) if they don't use it, in fact only 36% do.