As business owners, the one word in the English dictionary that may make us cringe more than any other word may be “free.” Other words that may make it to the top of the list of painful things we hear from our customers are: “discount,” “can I pay later,” “can I get a “hook up,” – you know anything that would encourage businesses to decrease prices in the effort to capture the customer.

I know. I’ve heard these words more than enough. “Can I get the family discount?” “Can you do it on a volunteer basis?” And yes, just like you, I want to scream at every instance I hear these words – primarily because I know the investment of time and other resources it takes to execute.

Yeah. It may seem that there can’t be high costs in designing a logo or developing a marketing strategy or even managing your social media accounts, but the cost is in the research, technology, labor, materials, and time that could be spent on paying clients. Time is money…and if you have a normal hourly rate, frankly doing something for free can simply be a means of cheating yourself. However, there are instances when there is profitability in free.

How many times have you seen “1st session FREE”…or “Buy 1 Get 1 Free”…or “FREE Sample”…or “FREE for the first 30 days”…or “FREE XXX with the purchase of $50 or more?” You get the gist.

These statements generally have an unstated goal, such as “I need to clear inventory,” “I want to hook you as a customer,” “I know you won’t buy any other way (and yes, this has already been calculated into my financial plan)” or “we need to do this in order to keep up with our competition.”

Offering something for free can be a very effective marketing tactics. However, YOU MUST BE SURE TO HAVE OBJECTIVE AND YOU MUST WEIGH THE PROS AND CONS. 

Before offering a free service or product, here are a few questions you should ask yourself:

1. What am I looking to achieve? This is the first question you need to ask. Are you looking to gain new clients? To increase word of mouth? To get an on the spot purchase? To obtain a future purchase?
2. What will I offer for free? You may have a full line of product or service offerings. It may be wise to offer smaller portion of the product as a sample or a service that is not as labor intensive as others but at the same time  educates the customer on you offerings and lets them know why they need you.
3. Can I afford it? It’s wise to generally do some type of financial analysis prior to offering a free service determine how much it will affect their bottom line, esp. if they plan on losing money due to offering the free service. You need to understand how much they can afford to lose.
4. Will you be able to keep up with the demand? Is your product or service so greatly desired that by offering it for free, you’ll get a greatly increased number of customers? (7-Eleven Free Slurpee day is a great example of those.) If you expect a high number of customers due to the free offering, you’ll need to make sure that you can keep up BEFORE offering it for free.. (Or simply manage your risk by limiting the number or type of customers who can take advantage of the free offering. (i.e. )
5. What’s my risk? Will you have to neglect other customers to fill the demand of the customers looking for the free product or service? If so, this may not be a good option, or you’ll want to work this into customer’s expectations when determining project timelines. Remember, it costs less to retain an existing customer than to gain a new one.
6. After they’ve bitten into the free offer, what’s my next step? This is the most important question of all. How do you plan to get them to make an actual purchase? Are you capturing email addresses? Do you give them a coupon? Do you send up a follow up email, and in what timeframe do you send that email? If you don’t have a follow up strategy, then all the effort put into offering something for free may have been in vain.