The Difference Between Selling Something and Giving it Away

Jan 5th

I think these two comments do a nice job of showing the difference between how people perceive something they paid for and something they got for free. If people do not have a tangible opportunity cost they often tend not to respect or value the product or service.

Compare these side by side reviews:

  • the person who bought it thought it was one of the best ebooks they ever purchased.
  • the person who won a free copy thought it was dry, above their head, and has 0 respect for copyright, offering to trade it

To build up publicity and mindshare you have to give away value, but the same product often has a vastly different perceived value based on price point and how they got it. It is so hard to win marketshare by lowering price, but easy to win marketshare by increasing (real and perceived) value.

Published: January 5, 2008

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Comments

January 6, 2008 - 5:16am

So true. Coincidentally, it's a topic I touched on in my last blog post, and it's a phenomenon that I've noticed for businesses and services both on and off the net. I own a residential exterior cleaning service and have found that if I don't price high enough, most value-oriented consumers will look elsewhere, thinking that I must be cutting corners somewhere, whether that be the quality of the work or the level of customer service. In their mind it's often a direct correlation between price and value.

January 6, 2008 - 6:52am

I sell photographs and art related productions. From experience, I learned that cheap art does not sell. As an aspiring artist in need of exposure, I gave away sample prints as gifts, displayed my work at free venues, etc. In regards to the displays, people commented positively on my work but were not aware of its value.

As a result, I started to approach marketing channels and venues that represented the value of my brand. Over time, I realized a greater return on investment in terms of: 1) having a higher perceived value and appreciation of my work; and 2) being sought after to exhibit at other well-known galleries; which resulted in sales. However, it took time and sustained effort to break into these value-based channels.

My takeaway from the art biz: explain in detail the value of your work especially if you are giving it away for free or even at a discount. Otherwise, charge a fair and reasonable price for what you offer vis-a-vis your brand strategy. Consumers respect and pay for quality. A giveaway is a commodity.

January 6, 2008 - 6:55am

gives away most of the products for free. Gmail, analytics etc. Depends on how aggressive you are in gaining mindshare/market share, and how you're looking to brand/monetize yourself.

January 6, 2008 - 7:03am

Google does exactly what I am talking about. All the side stuff is just to make search sticker and help them hoard competitive market data. What allows them to afford all that is the brand strength of their core search product, their quality score elements which makes the market more efficiently priced, and the value of targeting associated with search.

January 6, 2008 - 2:22pm

Well, I won my copy and I thought it was a terrific read and hardly dry. So there you go.

More to the point, my wife does a lot of gratis design work for non-profits and we've often considered invoicing up front with a deduction that brings the cost to $0. Just to better communicate the value of what she does.

January 6, 2008 - 5:28pm

Couldn't Agree more Aaron. When you pay for something, you have a commitment to get value out of it, even if you might be disappointed in the actual product.

I think back when I was in school. Despite taking many classes that were boring or irrelevant to my career goals, just knowing that I'm dropping 5k a semester kept me coming to class.

January 6, 2008 - 6:38pm

Hi Aaron

This is quite an important point for anyone in business to realize.

My wife and I own a large retail store. Whenever we have done a client a favour, we've noticed that they are rarely happy or appreciative. When they pay, they are always happy.

We do give a lot of added value for free. Like you Aaron, we try to be generous with our expertise and some freebies - without strings attached (after all most clients are not stupid and will appreciate genuine generosity), but they are not left in doubt that our core products are worth paying for.

We need to put a value on our work for others to appreciate it's value.

January 6, 2008 - 6:52pm

I feel as though one point is being overlooked and that is strictly one of motivation.

I bought a copy of SEOBook for several reasons. I'd been following this blog for awhile, and knew Aaron was a quality writer and well-experienced in his field. Perhaps more importantly, I'd seen highly complimentary reviews from Aaron's peers that gave good insight into the book. Aaron also has a very good sell-sheet.

However, the deciding factor was that I decided I NEEDED to have this eBook. I'm launching an online retail business, and had already done enough research to understand the critical nature of SEO and that Aaron was one of the luminaries in the business. The book was exactly what I needed and became the catalyst for second business line. It was self-fulfilling prophesy, it had little to do with perceived dollar value per se.

Now, if I was not familar with Aaron and had not done some beginner SEO research and Aaron handed me a copy of the book. I might have found it a little long and tedious as well. Why? The lack of motivation. I was not convinced that I MUST have this book. Ergo, buyers are inherently more motivated than any other prospect. I think sjtpalmer expressed a related idea quite well. The more you pay for something, the more you commit yourself to seeing it through and justifying it in your mind.

A comment to iandstewart; I think the idea of showing value by revealing the actual price then reducing it to $0 is a good idea. One thing I've noticed from dealing with non-profits receiving free service (I ran an ISP for many years) is that value is indeed frequently unappreciated and those customers are equally as demanding (often more so) than our paying clients. Fortunately, those acts of generosity tended to bring in enough new business to offset the donated services but it most certainly can be a hit or miss affair.

Mike

January 6, 2008 - 6:53pm

Let's be careful here ... I agree with the post, and the comments about not pricing too cheap. But I don't think it's apples-to-apples if we compare value perceptions between someone who wants something and someone who never asked for it.

Isn't that the whole difference between SEM and blind outbound marketing, either email or paper mail? With SEM (both SEO and PPC), the whole key is that searchers expressed interest in the subject (i.e. they searched for it).

January 6, 2008 - 7:28pm

deBronkart stole my point! :)

What's interesting is that thwe person getting it for free said "it was dry and over my head," which doesn't say much about the book but more about the person. if it were easy, there wouldn't be a book about seo. :)

January 6, 2008 - 8:25pm

Well I don't want to bash that person. But all these comments have been pretty good stuff. And you guys are precisely right...when people pay for something that shows they really want it. That was sorta the point I was making. If you give something away or price low you don't get the kinds of customers who would succeed with your product or service.

January 6, 2008 - 10:38pm

We appreciate the book and its worked wonders for our domain ranking. Please keep up the good work!

January 7, 2008 - 9:05pm

I have paid much more and received much less. Sempo, for instance ;-) I couldn't resist.

For years, I taught yoga classes for "donation". I also taught other classes for a set fee. Very rarely did the participants of one class attend the other. There is an unfortunate perception that "free" equates "low quality". BMW drivers never came to the donation class. What I did find was that I made about the same income from both classes. The donation class had higher attendance but I made less per student.

January 7, 2008 - 12:52am

Are you attending? I saw you on the patricipant list?

January 7, 2008 - 2:59am

My wife and I should be attending Auston.

January 11, 2008 - 2:42pm

Cool! So are you interested in meeting up? I'll be there with my girlfriend.

January 11, 2008 - 10:38pm

I am not sure how busy I will be that day and whatnot. I think I am supposed to run into Shoemoney too. My phone number is 401 207 1945. You can give a ring sometime that day and we will see if we can meet.

January 13, 2008 - 5:33pm

Cool, got it. I'll give you a ring...

add me on facebok if you'd like:
http://www.facebook.com/people/Auston_Bunsen/648591044

January 7, 2008 - 3:53am

Aaron,

A future post might discuss ways of increasing motivation and value in a giveaway. I get the sense is that most people still feel it's a valuable tool. But in these times of trying to achieve efficiency, the strategy would seem to be to motivate the contestant as strongly as the buyer. Perhaps when arranging a contest, have a proper sell-sheet be part of the signup process. Treat it as aggressively as trying to convert a PPC sale. "Juice up" the winner and make them really WANT it, and perhaps maximize the impact when they succeed.

Mike

January 7, 2008 - 4:30am

Aaron,

One person does not make a good representative example and you should know that! At least there not pitching a bitch about spending $2,995 for that video series that you are part of with Marketing Ninja. That might represent a much bigger problem for you if someone was blogging that the video series was a pricey rip-off.

I hope this isn't a trend with you were you start posting more negative work. The last time I visited you were complaining about losing your #1 search position. I read on another blog that you were whining. Now, you are focusing on someone who sounds clueless about SEO. More negative.

I really hope you can refocus and stay positive. I teach an SEO Basics seminar for a non-profit business association where I live. My materials refer my students to your website, as an authority figure for SEO. I would hate to delete you for going negative.

January 7, 2008 - 5:37am

At least there not pitching a bitch about spending $2,995 for that video series that you are part of with Marketing Ninja. That might represent a much bigger problem for you if someone was blogging that the video series was a pricey rip-off.

It takes a bit of audacity to state something like that in a comment chastising me for being negative.

I am doing major changes to some stuff in the near future. As much as being positive or negative I am also trying to teach people from my mistakes and help justify my own thought process as I make some changes.

This post was not meant to be negative, but more to highlight the difference in perceived value between something that was free and something that was paid for.

January 7, 2008 - 2:54pm

Hardly negative at all. One thing I really like about Arron's writing style is the "matter of fact" nature. I don't sense the emotions and certainly do not hear 'whining'.

January 7, 2008 - 3:35pm

This is a most important issue, Aaron, and is often the make-or-break item in a company's success. Provided the value is there, a higher price will be assumed to be related to higher value. Just look at how all those deluxe brands in all fields confirm their superiority.

I believe as a strategy you should always go for superior content with a slightly premium price. That is the winning combination in my book.

January 7, 2008 - 5:36pm

One of the sites I run is an online trading school for a brokerage firm. The classes are all free. There is core group who really like and appreciate the time and effort put in on a daily basis. But then there is the other group.

I think the biggest difference is desire fot the material. The ones who have a drive and desire are the ones activly looking to get all the information they can on the subject. Things that are easy and fun are rarely high on the profitability list.

January 7, 2008 - 6:19pm

I agree with the general idea that this post is trying to convey, but I disagree with the example given. Just because the guy didn't pay for the book isn't necessarily the reason why he didn't like it. I write computer books and I have good reviews and bad reviews. Some people think its the best book on the subject they ever read and others think the book stinks. But everyone paid for the book.

What I would like to see is post that follows up on this idea. The internet is filled with free information and there is so much of it that people have little motivation to actually pay for something. So how do you get their interest with free content and then convert them into a paying customer? I'm sure there are many techniques that the experts know that would be useful information for newbies like myself.

January 8, 2008 - 5:32am

Perceived value is directly proportional to what you have spend to achieve it. This holds good for most commodities and is not an exception for Aaron's book. You can find the same information in chunks on other websites too, but I doubt if they are in such a consolidated and updated formatt. I think it's worth its price. Cheers !

January 8, 2008 - 5:47am

Hey Aaron,

Thanks for including my link in the article today. I appreciate that. I am very impressed with the feedback I received in the comments on my post. Everyone really enjoys the book a lot and it seems that you carry a very strong customer loyalty. It is hard to find that in the world we live in today. It will be a pleasure purchasing as well helping promote SEOBook and any future products you offer.

Best Regards,
Garry Conn

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