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How Giving Away Something For Free Can Make You Money

By Dee Kumar
18 Comments

It’s Dee Kumar here again with the third installment in my series on pricing your products. In the first article I talked about how to find the right price for your product. I gave you three of my preferred techniques, which received very good feedback from you, the readers. The second article focused on discounting strategies and explained why discounting is not always confined to a dying product, but can actually be used to reinvigorate a product too.

Make sure you check out parts one and two before continuing to read this article:

This last article in the series will discuss ways to offer your product for free, yet still increase business.

This article, unlike many of mine before it, will be brief! This is for two main reasons, firstly you may have noticed that Internet related traffic has dropped massively since the second week of July, meaning the audience for this article is heavily depleted. If you have been experiencing the same issue, do not worry, many Internet Marketers are experiencing the same trend. It is a combination of the end of exams, and the warmer weather encouraging people outdoors, that contributes to this traditional seasonal reduction in web based traffic.

The second reason this article is brief is because ‘free’ strategies are relatively easy to understand. I will present some improvements to existing strategies, but they should be easily understood. That is good because they should also be very easy to implement straight away.

Why Use Free Pricing Strategies?

If you have been online for some time you will know that everyone is trying to sell something. There are people pretending to be things they are clearly not, all in an attempt to entice people into parting with their cash. Well, this same hesitation you feel when being asked to buy ‘this and that’ online, is exactly the same feeling that your potential customers feel too.

Money back guarantees of course help a little, however they are also losing their impact as they become increasingly common. The potential customer comes to your site, perhaps having being burnt in a number of previous purchases, and now has to decide if they really want to take the risk with your product offering. Let us not forget that the current economic climate makes this decision even more difficult.

It is very easy to see how this predicament can occur and why it is becoming increasingly common. Interestingly, the very easy way to overcome this problem is simply to offer a free (or very low cost) trial.

This free trial helps eliminate the problematic questioning that is preventing your customer from buying, as they can now sample your value before parting with their hard earned cash. The simple act of offering a free trial also reflects the confidence you have in your own product, which is also positively acknowledged by customers.

Here are my favored methods of using ‘free’ or ‘low cost’ trials to aid your business income.

Ways To Use ‘Free’ And ‘Low Cost’ Trials

1. To Gain Subscriptions to a ‘Free’ List

This is now of the most popular methods to build a list. It is where you give away a ‘free’ product or report in return for the potential customers opt-in. The free product can be used to pre-sell other products in your range or simply to help build trust and loyalty for future ventures.

This method does work, however it’s effectiveness is decreasing as more and more marketers use the same method. The key is therefore not to give away something which is unrelated to your main product, but to give away something DIRECTLY related to a main product. Perhaps a first chapter or a short clip of an audio or video product. Something which directly encourages a bigger purchase.

This makes the opt-in more meaningful and implies you are not simply trying to create a list. Your list will be focused with customers who have the intention to buy at some point, and that is a much more valuable list then people who just want free information.

I used to build a list by giving away free reports, however I found that they would rarely take action. When I changed tactic to focusing on my main product and giving away a report relating to my main product, my conversion rate rocketed. Even on sites where I did not have a product, I gave away a report directly relating to the product I wanted to promote, thus encouraging them to purchase the affiliated product.

If you have ever wondered how to build a list for your business, then this method is by far the most efficient.

2. To Increase Conversions to a Membership Site

This works very similarly to the example above. You offer a ‘free’ or ‘low cost trial’ to your membership site to allow the potential member to evaluate your product, before becoming a fully paying member.

It works for some of the same reasons above. The customer can take a no risk (or very low risk) peak at your product and does not have to worry too much about being burnt.

There is, however, a second very important reason why this works particularly well with membership sites. To explain I will digress briefly:

In sales, there is a concept known as the ‘Yes Ladder’. It is a theory whereby you can convince a customer to agree to almost anything by only asking them to agree to small steps at a time. You gain the answer ‘yes’ to very small commitments first and slowly you build on them until you ask the ultimate question.

The exact same theory works with membership sites. By asking them to commit to only a ‘free’ or ‘low cost’ trial we are only asking for a small commitment. This is much more effective then asking them to commit completely to a monthly recurring fee at once.

Make it easier for your customers to say ‘yes’ and you will see an increase in your sales.

3. To Actually Sell Products

To be honest, I never understood why this still works! All I know is that it does, and rather well at that.

The concept is that you offer a product for ‘free’, but you charge the user postage and packaging (usually covering all your costs). I’m sure you have seen this in use on many websites.

During the last year it has been increasingly deployed by savvy Internet Marketers who have been sending out courses on a DVD in exchange for your physical address. (Usually a course they are about to make obsolete, so really they are not losing anything by trying this.)

From my discussions with such marketers it brings a surprising rise in loyalty. The fact that you receive a physical product and that you store it on your shelf, rather then lost on a hard drive really helps make the product memorable. This rise in trust and loyalty can only pay dividends in years to come, especially if your product is really of high value.

If you know the science behind why this works, be sure to mention it in the comments below. Although I know plenty of people using it successfully, I have never used it personally. I do, however, hope to use it very soon.

In Your Consulting Business

Anyone like myself, who has been involved in the consultant business, will know about the standard ’15 min’ or ’30 min’ free consultation session. It is where you give up part of your time in order to convince a client to part with large sums of cash.

This at times is quite frustrating as the client is often not prepared or not quite ready to make use of your service. You instead, put the time down to experience and networking, but realistically you know many of those ‘free’ sessions will be dead ends.

After many months frustrated with this never ending waste of my time, I was introduced to a method which changed the way I convinced client to use my services.

I dropped the individual ‘free session’ and changed it to a free group session, where I gave an introductory talk on a topic related to my business or perhaps even about my service itself. I was then able to answer questions effectively and encouraged them all to use my services (I usually offered a discount if they signed immediately, and when one person signs, the others feel the peer pressure to sign too).

When I had conducted a few of these, I dropped the sessions completely and replaced it with a downloadable copy, which had been prerecorded from the live sessions.

I saved a lot of time as any clients who now contact me, have watched the introduction video and thus have a very high potential to actually buy.

It took me a long time to realize that my time had a high cost. By giving it away endlessly for ‘free’ I was getting nowhere and reaching the limit of my time. When I switched to a ‘free’ downloadable Introduction session, I reduced my time expense and found myself being contacted by only seriously interested parties.

‘Free’ marketing strategies work when you learn to use them the right way. Often just the smallest of changes can bring big results.

That concludes the third part in this series where we have discussed how to price your product, how and when to discount your product and, of course, the value of ‘free’ pricing.

As always, if you have anything to add to this discussion, please use the comment section below to share your views.

Dee Kumar

About Dee Kumar

Be sure to read more from Dee Kumar on his Twitter Account and his Business Development Strategies Blog. Dee has also created a video series teaching 'essential business basics' which every marketer should learn. You can access the video series for free by clicking here: Double Your Success with Dee Kumar's Essential Business Basics course’,

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18 Comments

  • When you give something away as of a ebook, juts have links in them to other products..you will make lots of money this way..

    “Black Seo Guy “Signing Off”

    • I noticed this in an ebook I downloaded the other day thought to myself it was quite a clever idea thought to myself, ‘why have I never thought of that’.

      When I put my next ebook together that is going to be in the plan but I still want to add value to my freebie and not just a list of links to buy products.

    • Dee

      It’s all part of the ‘yes’ ladder as mentioned above. I use my ebooks to make them say yes to a bigger purchase of my product, you use it to place lots of links. But I do not believe simply placing lots of links is a good strategy at all, better for it to be a planned strategy to make them upgade, as that will bring the higgest conversions.

    • When I have gotten free reports, the ones that got me to click through on the affiliate links were the ones that had links that said…click here to get the best keyword tool. They didn’t use the name of the tool so that people couldn’t go directly to the site, it was done in a way that people had to go back to the actual electronic pdf file and click the link. If people print the report out, and it says…”market samurai is the best keyword tool” then people will go directly to the site or to another affiliates site. Just a tip that I have found to be useful. I have found many marketers don’t know how to put affiliate links correctly into their reports.

  • You have to be careful with “free plus shipping” and “free trial with automatic billing if you don’t cancel” type offers. VISA and MasterCard have tightened the rules on this kind of thing. They haven’t been completely banned, but many merchant account providers don’t allow them anymore.

    • Dee

      Vistaprint still run their entire sales strategy upon it, so I guess it really does depend on the seller.

      If what you say is true then you quite rightly mention that this idea may become harder and harder to implement, possibly because of stupid scamming marketers who ruin it for the rest of us.

  • @Dee – great idea. I’m going to start split testing offering access to the first module of my membership site instead of my free ebook that I’m using now.

    • Dee

      Try it and let me know. Remember the whole idea of free is not to build a list, but to build a list of people who have an urge to buy something from you… (well in business anyway)

  • Hey Dee, these articles are very useful, I hope I can remember all this when i need to apply it. Perhaps I’ll have to print them off and have them visible somewhere.

    I have one question about “free reports” do they actually work? I always thought they were everywhere because everyone offers them, so I’ve never valued them much & thought others might be the same.

    I like the idea of doing group sessions then creating a recording that people can download in the place of the session. I’ve totally been sold on things from listening to webinars in the past, it’s a great way to get more comfortable with the purchase and get a better assessment of the person you’re buying from.
    Cheers, neroli

    • Dee

      Hey there madam!

      Free ebooks totally work when they have a purpose. Too many people creat an ebook and give it away free as a means to build a list… pretty pointless really as what will you do with a list of freebie seekers?

      Instead use the ebook to give a taster of your main sales product, that way if they like it they will upgrade, so it not only builds your list but drives sales directly to your main product too.

      People forget why they are doing things… they hear ebooks work and create one without thinking through a strategy or reason for having it. Make it relate directly to your product and it works wonders.

  • A friend of mine taught me long ago that information wants to be free.

    I didn’t know what he meant at the time, but gradually I learned his point over the years.

    I’ve been use to making all my information free for so long, and giving way more than I get, that I think I started to undervalue the strategy of the freemium to premium continuum.

    I think one of the most valuable things the free part can do is help build awareness and create demand generation. For example, I’m realizing that in my niche, there’s not enough awareness of the power of Enterprise Strategy … and one of the best things I can do is share what I know on how it fits in the bigger picture and will play a key role in next generation businesses as we undergo cloud transformations throughout many industries.

    • Dee

      You got the right idea there, and maybe you already summed it up well with ‘freemium to premium’ because that really is the aim of an ebook.

  • ‘Fortunately’ it’s not Sunny weather, at the moment…,
    it’s currently raining here! :)

    Anyway,

    I currently use the (not free) tiny little ebook that I sell online
    as a Free Bonus for when you buy the – BONUS – Offer that you can find on the right near the top of the Home Business Lifestyle Blog.

    In this tiny little ebook you will also find an active link to my Blog, so when you read it – and forgot to bookmark the (main) blog with the handy
    Yello Post-it – One Click – Bookmarker – you can easily find my
    Blog back every time you read it.

    All the Best,
    To your Happy - Home Business – Inspiration,
    HP

    • Dee

      Good idea – but remember, most people will only read your ebook once and then leave it to clog their hard-drive along with the hundreds of other new ebooks they download.

      Make your ebook have a purpose, or lead to something to gain maximum leverage.

  • [...] product or service is without value. Well, Dee Kumar suggests that you can make a lot of headway by giving things away! How does this work? Check out his post to learn more – great information in an [...]

  • Thanks for a great series.

    While I don’t dispute the points you made, I wonder at the longevity of free trials. As more and more people get burnt by marketers who hide in fine print:
    - the way to cancel a subscription
    - the time period in which to cancel before the credit card automatically gets billed
    - an opt-out from the business selling a customer’s info to third parties
    - permission to email the new potential customer who then gets spammed multiple times a day
    - hidden charges that erase the claim of “free”

    customers will not want to risk signing up for a freebie if it means they have to go through another painful process of getting “off a list” once another company has abused the trust and permission given.

  • Once I had a pretty high priced class and not too many people enrolled to it. For a while I started to offer the class for free, and all of a sudden the participants started converting into clients for my consulting business.

  • Some say that the best things in life are free.
    Others say you get what you pay for.

    But when you can have something for free that is
    also designed to help you succeed in your on line
    business, well I say grab it while you can!

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