The Hidden Cost of "FREE"

They say everything in life has a price. Well, in business so does the word "FREE". It's not apparent when you first hear it or say it but it is one of the most misused words in business I know. When people often hear it or see it used the first thing that comes to mind is "Oh I wonder what else they are selling or what kind of gimmick is this? Knowing that there is always something else. And they are right, there is always something else. So what is this something else? Now I get it, FREE is a strategy to get someone in the door or add value to the business you offer and it usually works. So what is the hidden cost you might ask?

The hidden cost is in how you and your customers see you and your business. The truth of the matter is most of us don’t value what we can get for free. We don't, and our experience as business owners tell us this. Let's look at how you feel as a business owner when someone asks you for something and not want to pay for it. Your services for instance? How often have you been asked to do this? It's as if someone just asked you to drive them to Portland and back not give you any money for gas or snacks. You want to look at them like they are crazy. That's your first thought. Your second thought, after you unclench your fist is to say WAIT, I need to eat and if I do this for free then MAYBE they will want to hire me/buy more of my services and then I will make some money!

THIS is the hidden cost. Your value has just been diminished to nothing! When you give your services away they have no value to the one receiving them. Want to know how I know! Because they will come back again and again and ask you for something else for free. Not expecting to pay a dime! That's why you take all of the napkins you can when you go to Starbucks! You don’t care how many you take. You take as many as you can get away with so you don't look homeless when the person standing next to looks at you with a disgusted look on their face shaking their head (knowing darn good and well they are about to do the same thing).

Think about it. You've put all you can into your business and now you are going to give it away or not charge enough to keep your lights on. I've been there. It sucks!

The next hidden cost is your customer. Yes, that's right your customer. Do you really want to do business with someone who will take everything you can give and not pay you for it. Friends and family are bad enough, but when you add your customers to this list you're business doesn't stand a snowballs chance in you know where of being successful.  I had a colleague mention to me the other day that one of his clients told him that they were going to leave him and go to his competitor if he didn’t charge more. That was really cool to hear. I actually believe that most business owners should raise their prices by 10%. Why, because when we started our business we thought that was the only way to get business.  If we gave a little bit of it away all in an attempt to show how good we are.   Then we adpot the "Aww shucks I'm just a..…" you finish the sentence.

The other hidden cost is that unfortunately most small business owners (a) don’t have a marketing strategy and (b) are clueless to what or who their target market should be. That's how we end up giving our business away for FREE! In an attempt to get more customers. Not only do we undercharge, our products and services end up infront of the wrong people so we end up selling them to the lowest bidder all the while wishing someone would come and save us from ourselves and pay us what we are worth.

The last hidden cost I'll share is to the product or service you offer. Listen, I came from the land of FREE stuff. In the insurance industry the company reps walked in monthly with more give away's and free stuff than I knew what to do with. I'll be just fine if I never get another free coffee mug, pen or post-it notes for the rest of my life. I have enough to pass on to at least three generations. Go to any trade show and look at the stuff they are giving away. It's usually not top quality stuff is it?  Now look at what you give away in the way of your in products and services. Some of us, myself included give away far too much and get way too little. And this is were I'll end for now.

FREE should be only a part of your marketing strategy ad it is not meant to last forever. As a matter of fact, there should come a time when you eliminate it from your business model entirely as far as I'm concerned. It elevates how you feel about your brand and how others view it as well. Let's face it they don’t give you a darn thing for free when you walk into the Aston-Martin Dealership accept possibly a cool or warm beverage, stunning customer service and smooth atmosphere. The good stuff comes after the sale in the form of value added benefits of ownership and a free item or two. This is how your business should be. I'm sure you have some thoughts about this. Share them with me, I'd love to hear them.  Until next time, get out of the way of your business.  Be well.