The Audacity of Free

October 2, 2009 · Comments

free sign When you run conferences, everyone wants in for free. It’s understandable. Times are tough and people don’t have as much money. I’m running Inbound Marketing Summit in a few days, and it’s not free. The ticket price is $695 to attend (unless you know @dmscott, @justinlevy, or a few other people, who have codes for VIP discounts).

Otherwise, you’ve gotta shell out to get in.

The venue, Gillette Stadium, is home to the New England Patriots. They charge me money to be there. The food costs me money. The power, the booth construction, all that stuff. This is simple, right? It’s a transaction. I ask people for something, and they tell me how much it will cost. Sometimes, I get a discount if I buy in bulk.

Where things get harder to understand are when they are intangible.

My friend Justin Kownacki wrote about this yesterday.

The sense of walking into somewhere and listening to sage words doesn’t seem like it should cost money. I understand this. It’s just sound moving through the air to your ears, right?

Let’s move the discussion away from what it costs to make a conference, and let’s talk about value overall, and what we need to consider

The Audacity of Free

There Are Costs to Things – Information is write once, repeat forever, but there are costs to things like time, presence, access, etc. Real costs, not just assumed ones.

Some Costs Help Gate – Seth Godin just wrote the other day about what if Craigslist cost $1 a post, and he was spot on. It would cut down annoyance. Darren Rowse just launched Problogger.com for really cheap (too cheap, if you ask me), and there’s a reason for this. Paying something for a service or good helps us value it more. Christopher Penn and Whitney Hoffman and I decided to charge money to attend PodCamp Boston, because that made people commit to showing up. They weren’t willing to walk away from their investment, and that ensured our attendance numbers would be accurate.

Free Makes It Harder to Charge Money Later – There’s a great post in Entrepreneur magazine pitting Chris Anderson (Free) against Jason Fried (37 Signals), and I agreed with what Fried had to say on the matter. Free can cause wild growth, but is that the real goal? See also Raul’s post on free for more ideas.

Free Encourages Waste – Permit me a moment of sour grapes. I volunteered to attend and speak at an event recently. I paid money to book a flight and hotel, so not only didn’t I charge a speaking fee, but I paid for the privilege of helping this event attract an audience. They chose to move the event (hey, I run conferences: this happens), but forgot to contact ME about it. I’m out money because I did something for free. Do you think this makes me feel inclined to do that again? (hint: no).

Charge For Value, for Gating, for Your Needs

I charge what I’m worth to speak and to consult with companies. My agency charges for the work we perform for clients (and we’re less expensive than most). Wiley charges for Trust Agents because they have tons of costs behind it (remember: I make like $1.40 a book).

Don’t ever feel embarrassed to charge for value. Never apologize that something costs money if you’ve determined the value of it.

Sometimes free is a promotional matter, a loss leader, the chance to build some buzz, but sometimes, we get confused on how that works, too. When companies send something for free, they’re hoping that you’re so moved by trying the thing that you’ll be motivated to tell others if it’s worth it. That’s in their marketing budget. They expect that.

I’ve been running a promotion since August that trades values. I made a deal where if someone bought 200 copies of Trust Agents, I’d speak for 1/2 day for free. When those sold out, I made the same deal for 300 copies (still 1 of those deals left). In doing this, I give up my speaking fee (which is much more than the cost of the books), but I do so because it’s a chance that those 200 or 300 books will get into the hands of people who might be able to use the ideas, and also into the hands of a select few who’ll want me to speak professionally or consult or work with my agency.

Free can be a wonderful thing, and there are some really great things that are (and should be) free. But free is a choice, and it’s not your buyers who decide this, no matter what we like to think in social media kumbaya-ville. Free is beautiful, and costs are part of life.

Photo credit Koka Sexton

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  • webspider20
    It is really true how much less crap would be on craigslist if they charged $1. I love the site but there is too much spamming and scams going on right now. I love this post, thanks for the great read
  • I get where you are coming from, but I do know there is a growing interest in free. from where it comes I haven't a clue. However, where someone is trying to make their mark, free has its place. A young graduate looking to gain expereince in an industry that doesnt do graduates, may use the concept of free to market what they offer the world.

    Obviously, there are many situations you have covered that I agree with. But I would not use the concept of charging for everything as a blanket philosophy myself.
  • terryreagan
    In Chile, where I live, there is a saying : "that which costs nothing is worth nothing." Take note
  • use Audacity to do something very similar with radio programs that I record from FM. Once I've ripped the recording to disk, I use Audacity to trim any extraneous material from before the start of the actual program, and any extraneous material after the end of the program. This way I don't have to worry about starting/stopping the recording at the precise moment that the show starts/ends. Very quick and easy to do.
  • Hip hip to you. Great article, I passed it along as the tip of the day to my clients.

    I say "stamp out freebie seekers!" Wrote this article when I got tired of folks asking me if they can pick my brain. Well, my brain pays my bills and gives me the life I want to lead....

    Now I say -- you have 5 mintues, then we're on the clock.

    Wrote an article on the 10 ways to say no to freebie seekers; if you want the other 13 ways and additional information on pricing.... you guessed it --- You have to pay for it!

    http://www.coachmaria.com/articles/sayno.html
  • ThistleCoveFarm
    I don't do free. The least I'll do is expenses and that's only if the speaking engagement is local.
    In my experience, the worst offenders to ask for free are government and 501.c.3 employees. When I've pointed out to them they are being paid to be there so why should I do it for free, the return look is a blank stare.
    A few years ago a farmer in the next county called me and asked if I would "look over his farm and give him some ideas". I told him a minimum of two eight hour days resulting in a written report would cost $400. His response, "I can get the extension service to do it for free". I told him to call the extension service. It's true he didn't hire me but it's also true he's not using tourism on his farm to increase farm income.
    I make $500 in one morning conducting farm tours; that experience and information is worth a lot more than the $400 I charge.
    Those with eyes to see...see. Those with ears to hear...hear.
    The rest whine about how they aren't getting anywhere...fast.
    My husband tells me, frequently, if I'm not getting as many jobs as I want...raise my prices. People's perception of free is "it's worthless"; their perception of expensive is "it must be really good".

    Your post is excellent and timely, especially in this economy.
  • Outstanding post Chris! Part of helping people is saving us from ourselves. If it doesn't cost us something, we aren't likely actually take action. It's happened over and over when I offer people free consulting advice. One of the challenges in establishing consulting fees is to charge a fee they will pay, but make it enough that it's hard to walk away from the advice.
  • Veronica
    Such a good point: "Free Encourages Waste." It's so true. Although Twitter has become a valuable marketing tool, think of all of the clutter and junk that is surrounding the few users who produce worthwhile content. I seriously doubt this would be the case if it were a paid service.
  • This is exactly the right time for this. Raul's post started a cultural shift in Vancouver, and the reverberations have gone international (obviously, since you've picked it up). We do many things for free, and I just volunteered to liveblog the Surrey International Writers' Conference for free, because I've been deeply involved in that conference for a decade or so, but we do, also, have livings to make. And at a certain point you say "you know what? I'm not Joe Blow Haircut Blogger. I'm a talented professional. And I charge for what I do."

    and, yes, then the market tells you what it thinks of that. But that's fair.
  • Gr8t article, this whole weekend at #izeafest, spawn in me to do what I need to do, get paid by the value I bring, kudos @Chrisbrogan
  • beckymccray
    "Memorable experiences are the ultimate scarce commodity." That's what I scribbled while driving, listening to Chris Anderson's Free. As the marginal cost of digital distribution falls toward nothing, the marginal cost and the value of memorable experiences continues to climb. That's why we charge for conferences, consulting, personal contact, and even initial meetings.

    Drawing the line between free and paid is a continuing discussion point for small businesses. Most recently, we had a great comment thread on what to do when a prospect stands you up. The first response? Never do a free consult. Maybe not practical in small towns, but certainly an interesting discussion.
  • alexfayle
    This conversation is happening everywhere and it's setting off a millions thoughts in my head. I blog to showcase my coaching services - but the more I get into developing these services, the more I see the limitations of free and so something is developing but I'm not quite sure what or how I would deliver it, but it's coming...
  • Excellent post, Mr. Brogan. I am an educator in the field of women's safety and violence prevention, and my sales team bumps into this a lot. Especially when businesses/people work in "save the world" sorts of issues, there seems to be an expectation for free. Professionals who work in good causes (not necessarily non-profits...who by the way, also need to somehow make money to thrive) have a guilty feeling about charging for their save-the-world work. As a result, many of these people are poor and unhappy, which makes them bitter and resentful of the very issue they hoped to solve through their life's work. Kinda makes you wonder how many great accomplishments the world is missing out on, because too many people don't feel the right to make any money while making a difference.
  • Chris, this is a great post, however, 'Freemium' seems to be the new biz model of the future. Just look at Freshbooks, Jott.com, Box.net, Dropbox and many other new businesses. In fact, my main competitor is giving his product away for free.

    Consumers have no problem paying $4.50 for a frappucino, but when it comes to products, especially digital products and consulting services, people want it for free.

    Eric
    http://www.onlinemediaanalyst.com
  • I think posting this at all weakens your position. You should not have to justify charing for your time in any way shape or form.
  • benprendergast
    Yup, spot on Chris.

    Presence, service, and a singular vision are all crucial reasons to charge a fee for a service. With Copper Project we charged a fee from day one (originally $99 for server license code), and we've been profitable and growing since 2002.

    While basecamp is a key competitor, I'm right behind Jason Fried on this one, but can't help but envy the Zuckerbergs and Evan Williams of this world.

    Best of both worlds? Aaron Patzer of Mint.com, hey Aaron, give me a call?
  • This post made me smile for many reasons and brought to mind one of my fav. sayings "The only difference between a $50 whore and a $1500 whore is how she sees herself." (of course you may like to replace "whore" with consultant). ;-)
  • Seems like the same word some days. : )
  • My mama always said, "Why would he buy the cow when he's getting the milk for free?" Since I started working for myself, I have found that the dating rules work best when doing business with people.
  • You're not wrong. : ) I talk about work like relationships all the time and it works every time. : )
  • Dee
    Made me think of the old adage "nothing is free" Someone somewhere is paying. Even the air we breathe isn't free.
  • tonyhollingsworth
    Great post Chris, I'm glad to have found it (via Twitter)

    We've been discussing the same at our Northside Coffee Mornings community get-together each week - http://nscm.posterous.com The discussion was around speaking for free versus paid speaking: we determined that "free" obviously devalues what you are doing, and further more, can lead to letting your clients down. If you service clients for free, then go out of business, where does that leave your client? In the lurch, that's where.

    Just this week in Sydney a free (sponsored by Adknowledge) event occurred attracting 100's of attendees. I was following the hashtag #asm09 and noticed @trib asking about the quality of the content: http://twitter.com/hollingsworth/statuses/44643...

    I suggested that being a free event might be detrimental to the quality of the content which led to some Tweets being exchanged whereby @problogger who you quote in your post signalled his frustration at free speaking enagements:
    http://twitter.com/problogger/statuses/4464910527

    Some of the discussion can be seen here:
    http://friendfeed.com/search?q=trib+hollingswor...

    A very timely post indeed - as you can see it's on people's minds from one side of the world to another :-)

    Thanks again for sharing, and as always, your posts generate healthy discussion amongst the comments from which I always benefit subscribing to (for free! ;-)

    Cheers,
    Tony Hollingsworth
  • branko_gt
    Long time ago, i forgot who, told me that it is a bad business, giving away for free what you make your living from. This seems to go against the grain of the world that, inundated with all sorts of "free" stuff, is starting to expects everything for free without even thinking about it.
    The problem with free is that the perceived worth is most often not equal to the value of the offering but to the price paid (hint 0).
    I don't think it is valid to compare commodity to specialist services. Commodity is mostly offered for "free" as a marketing exercise that is intending to cover the actual cost elsewhere.
    Unless we are talking charity, giving your time for free is a bad idea as those that pay for your time may feel cheated.
    Even if you decide to offer time (speaking) in return for book promotion, it should not be the same service that you offer the paying customers.
    Giving time (or service) away for free does very little to promote the value of your time (or service).
    Honestly, it is better to double the price then reduce it to zero. ( i am exaggerating here of-course, it is a fine art, finding the right price that will give customers the satisfaction of the great value)
  • There is an alternate, everything is free provided you contribute to society as a whole, if you wish to opt out and not contribute then you should pay for that privilege.
  • I have to agree with you on this. I am one of those people who is not in the position to pay for a conference but I will volunteer to work it because I have been working in the entertainment industry for the past six years and if I can't go then I might as well volunteer and get some benefit from it.

    Free is NOT Free. It never is. That is like saying there is a "secret." Does "secrets" and "free" really exist? Probably NOT... there is always a cost and someone is going to pay eventually in both cases.

    People complain when they get things for free and they act like mad people. I work in an arena and I have seen this up close and personal when they all want "bobbleheads." Little do they know, that it would have been cheaper to just go to the store and buy one then get to the arena 2 hours early and spend twice as much money on a toy.

    Go figure. If I can't afford something I ask the presenters if they need volunteers. Volunteering is worth it because you can still network and learn something in the process.
  • evanhadkins
    Yes but there are a number of issues. If you charge the question is: how much? And this is very complicated. The information gained from a conference can be gained from info products - and the 'value' of those is awfully difficult to decide.

    You can just ask people to pay what it is worth to them (having explained what it cost you). There is a discussion about this on Mark Silver's blog. (It probably only works when there has been a chance to build a relationship ie. not info products for instance.)

    This is a bit difficult for me. My stuff is about health and I don't think health should be confined to the wealthy.
  • Chris,
    Great post. So many thoughts come to mind. I have both been extremely successful with FREE and very disappointed with FREE (well, actually, discounts).

    Disappointment - I run a highly successful toy & baby product retail store. We often get customers asking for discounts. Every single time I say yes (which is rare) it comes back to bite me. For some reason those customers are the pickiest and also least respectful. And I believe a lot of that comes from the fact that since I was willing to discount - to devalue the product - they have less respect for me in the first place. I stopped doing it altogether two years ago and have actually seen our business grow and our problems decrease. There is a perceived value in everything and when you discount or give it away, it decreases that perceived value.

    On the other hand, my wife and I started a magazine for parents that is available free each month. Over 10,000 got picked up every month. It was advertising supported, and although not a huge money maker, it paid it's bills and then some. It outgrew us and we sold it (for a free ad for my store each month). Three years later it is still viable and recognized community wide. They key was the content. It had great articles, relevant information, and the most comprehensive calendar of events.

    I think there are arguments on both side of this coin. It definitely depends on the goals of the business. For my wife and I, making money was not the primary goal of our magazine (although we did make money:-). Spreading information was. For my toy business, making money is the goal. And sometimes raising prices is the only way to create value.

    Right now I'm having my own internal free/fee debate for my latest venture of consulting/assisting indie retailers. I have a bunch of free articles with incredible value for which I could easily charge, but I also have a products section that I'm starting to load with more value-based, fee-based information. It will be interesting to see if the freebies offer enough value to convince people to buy the other products. Again, though, my goal is info first, speaking engagements next (for which it has already been successful), and ancillary income later. We'll see how it works out.
  • Free awareness of your business is one thing. Free toys, not so much. I think it still makes sense. : )
  • Networkaegis
    To paraphrase Shakespeare "for there is nothing either good or
    bad, but thinking makes it so". This certainly applies to the concept of Free. While Jason Fried takes an opposing stance to Free in the Entrepreneur magazine article, his company uses a free month for the 37Signals product.

    This is Free done right. It doesn't negate the value of the product, you know exactly what you will be charged if you don't cancel before the end of the month trial. It does negate the sense of risk from the users perspective. The user gets to knock around the application for a month and determine if it scratches where they itch. It is a win/win for the vendor and the client.

    I couldn't agree more with Chris when he points out folks don't value free. They conference that moved didn't feel the need to notify him of the move. They saw no value in him being there. Had they put up the speaking fee or even paid the travel expenses do you think they would have notified him immediately?

    Free is neither good nor evil, Free is a way to allow folks to sample our products and/or provide a way for us to promote our products. Free is what we make of it, Free can either help our businesses or hinder them. The answer lies in how we choose to use it.
  • Great post. With the advent of the internet, the notion exists that things that are easy to get, i.e. digital should be free. The person who provides valuable information or insight has to fight an uphill battle to have it perceived as carrying a high price. Three ways to value your products or services can be via the PERCEPTION of your brand, your ability to COMMUNICATE that value and your ability to DELIVER on your promises.
  • Great post Chris!

    Thanks for sharing your book/conference model. I was curious on how you handled travel, expense, speaking fees ever since I met you over a year ago at a Tweetup with a small, but quality group in the Detroit area just before you presented at an IT based event. (That tweetup group, btw, is now over 100+ in attendance, last I knew.)

    There might be something here that goes with the free, pro-bono/volunteer work for doing something new or emergent such as a new angle to doing work, a new community of professional forming, etc. This could be connected to the idea of the life cycle of an organization - Adizes is a reference - has a model on his website http://www.adizes.com/)

    "What's in it for me?" is not a self-interested question -- as charging a fair, experience-based price for helpful work is the stuff of maintaining a healthy network of colleagues and reputation, quality, credibility, and ethics...etc.

    Regarding your book and your referral to Covey, he also built his 7 Habits Business using the work of others, as is said my many in my field of organization development. I have a pair of dusty certification binders for teaching Covey 7 habits (paid by my employer at the time.) I never taught a single session. Ah well, it was a lesson learned from the consulting group at the time to get commitments before certification -- and perhaps in the conference business -- advance payments book purchase commitments, whatever works. Exchange of service in good faith seems to be part of the lesson. Thanks again, --Deb
  • You asked about my speaking, etc. Here's how I manage it:


    *More and more, I have too many requests and not enough time (not a bad way to be, but I always feel bad when I have to say no).

    * I do some small percentage of free speaking, but mostly if it's something where I can piggy back on another paid event, or if I can see a return on my larger goals.

    * Most of the time, I speak for a fee plus travel, and when I'm on such a trip, I try to put in a free event or two to give back.

    It all works out in the end. : )
  • Everyone wants something for nothing.. until it comes time for them to request payment. GREAT post. In short the price of an event doesn't matter.. if you can afford it go.. if not stay home. Regardless of the price the most important questions are:

    What did you learn? & who did you connect with? If you can answer those questions with excitement then its worth cost. Knowledge and relationships are priceless.
  • Great post Chris. I totally agree.
  • Chris

    Brilliant as always. I think that free is good in certain forums however in others I think it almost goes to trust. Why are they giving this away for free, will they give me all the information I will need? I also see it as diminishing the value in what you have to offer. No-one wakes up and says today I will work for free (unless of course they are at a soup kitchen, charitable affair,etc). People asking for you to cut prices for them is becoming more and more the norm. Reality, this is the cost and if you cannot afford it then sorry you cannot afford it. I am done beating myself up over deciding to reduce costs and trying to work with people.

    As a small company I have started charging for proposals. Too much time was being spent on them and getting no real return. I have cut out those that were looking for ideas and moved over to those that are serious about working together. Those looking for the free advice, I send over to my blog as there is enough free on there to get them started.

    It is not the fault of clients or anyone that I have bills to pay and a child to raise however me paying these bills and earning a living benefits them.
  • beley
    Thank you, thank you, thank you.

    I don't mind paying to go to conferences. I don't mind paying for products or services. In fact, I'd rather pay for them because a) I think that I get more value when someone's being compensated for what they're doing and b) I like supporting people and companies that provide value.
  • "Sometimes free is a promotional matter, a loss leader, the chance to build some buzz"

    Brilliant Mr. Brogan! If it doesn't generate leads which convert to buyers, stop that activity and try another one. Companies give away samples for a reason. There should be a purpose to our "freebies" if the point is to make money. And we all have bills to pay. Thanks for the reminder!
  • Great post Chris. We access so much for "free" on the Internet that the boundaries can become blurred. Many years ago in another existence as a struggling illustrator I undervalued and undersold my services in the mistaken belief that it would bring me more work. In fact what I was doing was creating the expectation that my time wasn't worth more . Lessons learned.
    I now manage a psychology practice, contrary to the belief that may exist , even here people want free - or to try before they buy! When clients believe you deliver value, that you can help them reach their goal you don't have to buy them with discounts or free services. That's not to say that pro-bono work does not have its place.... but its not used as a marketing stategy.
  • chrislorenz
    Hey Chris! I was "the other Chris" at the Chapman U #broganoc talk (the guy with the red cross t-shirt). Though it was awesome that the event was free, I agree that charging for things that add value is something that has to be done. Time is money and if you are adding something of value to other people's lives there is no reason to feel that you shouldn't be paid for it.

    There was an interesting article on AdAge about Kraft's Iphone app that kind of touches on this as well.

    http://adage.com/digital/article?article_id=139372

    Anyway, hope all is well and thanks again for all of your hard work!


    @chrislorenz :)
  • Ah, want to know the trick there? You got in for free with another 800 or so folks. In that audience were about 80 people who would gladly pay my fee. So, 90% of you weren't my paying audience, but 10% of you were prospects for the future, who might now hire me to speak professionally at their venue.

    Best of all worlds. : )
  • Thanks for saying it Chris 8). Now I can just send people here when they ask for a free pass. In fact I already did =p
  • chrislorenz
    Very true, love to see that reciprocality in business works! I am currently working on a fun hobby project that I am hoping to emulate the same give/receive mentality :)

    Have a great rest of the weekend!
  • Chris,

    Way to go and fire up this discussion. Fried made the same argument at the Future of Web Apps conference, covered in this CNET article http://news.cnet.com/8301-13515_3-10170665-26.html. I am wholly in the camp that free is not the future of the web. What I love about the 37 Signals approach is that out of the gates they know they're going to charge a price for what they do in a highly competitive marketplace. Thus, they spend time thinking through their products from their customers' perspective and eliminate superfluous features and functionality that do not provide value. By focusing on value, and charging a price for this value, they naturally create loyalty to their products, vision, and thought-leadership. You're providing the same in the case of the Inbound Marketing Summit. Quality commands a price. Well done.
  • It makes sense that Charge is the new Free.

    With the mass exodus from corporate jobs into entrepreneurship a lot of people have been carving out their niche, and Free has been a part of that process.

    On the internet, free content has been a defining feature of the hyper-connected web 2.0.

    But now the dust is settling.

    We're tired of another free whatever. We know what we like. We know what's valuable to us and we we're willing to pay for it. We're tired of sifting through the virtual piles of unsorted freebies. We want quality over quantity.

    At least that's my take on it.

    Thanks for a great post!
  • martincasey
    Free Makes It Harder to Charge Money Later - this is the fundamental point as once you set a precedent that you can work for free or your product is free, its virtually impossible to charge in the future. If a customer has to pay for something they attach value to it, they respect it and commit to it.
  • Free Makes It Harder to Charge Money Later - this is the fundamental point as once you set a precedent that you can work for free or your product is free, its virtually impossible to charge in the future. If a customer has to pay for something they attach value to it, they respect it and commit to it.
  • Welcome to the gift economy. With the emergence of social media, business has become interested in the gift economy because of scale it's suddenly monetizable. Non profits have been working in the gift economy for many years and understand exactly that events and other things of value don't come for free. Be great if this debate moves on to discuss full cost recovery, value and the art of giving.
  • Wow. That Seth Godin post is the first time I've radically disagreed with him.

    I generally get your point - and I generally agree.

    But to the people who make up the long tail of Craigslist a dollar is a lot of money. They're working minimum wage and that's 10 minutes of their time. There are a lot of random acts of kindness on Craigslist too. People giving away couches. You wouldn't see that in the paid classifieds of yore.

    What makes the internet successful is the fact that there are no more barriers to community. Even a dollar. Yes there is a lot of noise - a lot of crap. But if you believe in the crowd, you believe the crowd will filter that out.

    Your conference is a different thing. Real bricks. Real mortar. Real costs. But Seth is wrong about CL.
  • Great point to be made in that there are people doing charitable things, but what's the percentage of spammers in there?
  • Generosity and largesse are admirable qualities. However, the reality of cost and the responsibility of creating value are also important. Expectations are also a part of the balanced picture. And choice is also part of the equation. I like to look for the win-win in situations and get to that place whenever possible. Sometimes "free" can be a win-win, sometimes not.

    I also like Adam's comments reminding us that we need to consider the impact of "free" on waste. See many good comments below.
  • How about hugs? Can I pay you in hugs?
  • This is a well-constructed point about the financial reality of the world we live in. Portland has been struggling with charging money for events and has a guilty relationship with financial prosperity in general. I shared this post minutes ago and it's already being shared around the local scene. Thanks for that, Chris.
  • Really liking the line of thinking here. Imposing even a small/nominal fee (like the hypothetical $1 for a Craigslist ad) would be a sea change that would purge the majority of work-at-home scammers, 419-ers/lads from Lagos, pr0n and other undesirable stuff. After all, 1M x $0 = $0, but 1M x $1 = $1M.

    Often, there's also an unexpected chain of positive effects that cascades from making seemingly small tweaks to incentives. Think Malcom Gladwell in _The Tipping Point_ citing NYC's "zero tolerance" of fare-beating and graffiti on subways, and how this directly led to a measurable decline in other, more violent crimes in New York.

    That said, I'm still all about the *right* kind of FREE, with appropriate incentives in place. Heck, between actually meeting Chris Anderson http://tr.im/Agev this week and winning my admission to #IMS09 http://tr.im/As08, I'm a pretty appreciative guy.
  • troymonaco
    Very insightful post on both aspect of free vs $$ (especially the point about free encouraging waste and the promo value of speaking while waiving fee in lieu of bulk product purchase...!) Just finished reading Trust Agents, great read and must have for a 101 on for any foray into social media! - troymonaco
  • Jan
    You touched an exposed nerve with the headline of your post. Our small, but prestigious business college in Detroit has been running free workshops for unemployed people since January. Faculty are paid through a grant. I'm stunned by the audacity of HALF the registrants regularly not showing. We now register twice the number of the room capacity.
  • MarkStrefford
    Hi Chris, this is a great post. I absolutely agree that the transaction must be about value for both sides, and investing often reduces that "walk-away" factor.
    Mark.
  • This is actually not that expensive when comparing with a few the technical seminar/ workshops that I've been to. For businesses, the expense can be a tax write-off. Quality education is an investment, and it's not like you and your team haven't hosted lots of sponsored events. I believe you'll make it worth every penny.

    The best of wishes,
    Amber
  • I feel that way, but then I'm biased. : )
  • Great post Chris. Others have covered the debate about placing value on what is created from a positive sense but I wanted to pick up on your comment about the impact of "free" on waste.

    In the real world the environmental costs of waste and pollution are often not valued either (unless this value is legislated for), but we all actually do end up paying a price through the devastating impacts of climate change. In a similar way in the online world there are plenty of examples of situations where "free" can lead to the pollution and damage of the online environment (I wrote a post about this recently in connection with our industry, PR, here http://bit.ly/3w2WaN). Take an online community like Twitter for example. As there is no cost of entry there is no disincentive to spammers to enter this community. So they pollute it. However for those within this community this pollution has a cost in terms of the time wasted and the frustration caused.

    We need to value the impact of waste and pollution in both the real and online worlds at their true and full economic cost if we are to preserve both of these environments for the future.
  • Very good points, Adam. I think you have enlarged on a perspective we too often forget. Kudos to you and to Chris for challenging us to look at "waste" and "value" from a broader perspective
  • partywedo
    Bravo..!!!
    I read the Anderson/Fried article as well and I sided with value having a cost and therefore it should have a price for entry.

    Your words here, and your experiences as a promoter demonstrate that free by itself, has never paid a bill, kept the lights on, or made a payroll.

    I have been preaching this "pay for value" message to those who would listen, since beginning my adventures into social media.
  • MarkStrefford
    Hi Chris, this is a great post! I agree that offering things for free, or at little cost, means they are can be considered to be of little value. It's absolutely a case of the value that you offer, and absolutely about whether the price for this value is fair for your market.
  • Bravo, Chris. Would love to see this message promoted everywhere. Someone needs to throw some graphic treatment on "Don’t ever feel embarrassed to charge for value. Never apologize that something costs money if you’ve determined the value of it." into a motivational poster or something. Stat.
  • ralphcarlson
    It is hard for newbies to have a sense of what their value might be and what it is worth and easy to think that throwing pearls before swine- so to speak- by giving away things without planning will have a future benefit. You do have to understand what your value is and I don't know any other way than to throw it out to get a reaction. At some point, however, if you are serious, you will put a price on yourself.
  • janicetomich
    Thanks, Chris. I'm just getting my presentation coaching business off the ground and have been going back and forth about providing "gratis" work for initial exposure. And thanks Ricardo -- I agree -- time to step up!
  • "Free Makes It Harder to Charge Money Later" - Totally correct. Value Added is a deceptive statement - it should be Value Multiplied. Start with free, people expect you'l remain so, and the jump from $0 to even $1 is a huge one. But starting with cheap (and moving from $1 to $1.50 or even $100) is a real value equation.

    The real cost of free seems to be a reduced ability to ask for more. Makes sense, right?
  • Ah, what a good post! I started out agreeing with you, then disagreeing, and then at the end you won me over again!

    Free does have it's place! Many have unfortunately NOT grasped the idea - for instance when "sign up for a free account" actually only hold an account and no use :) And then, some are just cheeky and want everything for free :P

    Two examples I REALLY like are http://www.seomoz.org and http://www.marketingprofs.com - the free part is clear and complete in itself - but then a whole new world opens up when you pay!
    The clever thing about "free" in this case is I already know the quality I'm paying for - which makes it so much easier to get me to open my wallet ;-)
  • LaurindaB
    I agree! For anything you want in life there's a price to pay. I understand using give-aways to entice people to show up at your website. We live in a "I want it quick and easy" world. But anything of value is worth the cost to get it.
  • I am wondering how the view of free or low costs changes when looking at someone who is just starting out. I am just starting a coaching business and I know that what I do will give my clients value, but I am currently a no-name brand, so I struggle with the concept of charging for my value.

    At this point I have decided to charge far below what I see my value as in order to have the opportunity to get my ideas out there, help people who may not work with me if it was more expensive, and to gain a ton of experience.

    So, any suggestions on the idea of free for someone starting out?
  • Are your ideas no-name? Don't change the pricing. Maybe give people introductory offers. First session free is enough for most coaching professionals. Make the first session a conversation about what they need and what you can offer, and then give them a few general ideas, but promise that the paid work is much more focused and specific. Make sense?
  • Makes perfect sense. I am offering a free first session to get people started. I think it is also a confidence issue: coming up with a price that I can confidently share with people instead of a price that causes me to hesitate or not even attempt to start the relationship. As my confidence builds so can my price until I reach a point where I am still offering more value than what I charge (I think the value I offer should always be more than the price) but the gap is smaller.
  • Kammy1
    <<Earlier this year I had a law firm call and want me to speak to their associates. They asked me to waive my fee, as "with the tough economy" they were not going to pay speakers this year. I asked them if they were giving their clients free legal advice in the "tough economy"? They were not.>>

    They actually are probably giving a portion of their legal advice away for free. Pretty much every reputable firm does so. As someone already mentioned, it's called pro bono work, and it is considered part of a lawyer's duty to undertake a few cases. You can be a high profile corporate attorney and you'll still be expected to take time out of your busy schedule and help that divorced mom who can't pay her bills fight for kids in a custody battle, or at the very least, help a non-profit form their charity.

    There are plenty of occupations that give thing away for "free" without harming their livelihoods, and it makes the world a much better place. Free shouldn't be given out to everyone but it has its time and its place.
  • nicolefiliatrault
    Reality check - thanks for hitting the nail on the head. Free is (or can be) the other cost.
  • gerardmclean
    My company doesn't even do presentations for free.

    We used to put together slides and proposals, etc. and spend a lot of time only to have the prospect tell us "we're going a different direction" and then use the information in-house or for competitive quotes. If a potential client wants a presentation, we point to existing work and promise that we will do as good or better for them. The serious clients sign up; the ones who just wanted to suck us dry quit calling. (the last scene in this short video with the chef: http://bit.ly/yZONY )

    I've had knock-down arguments with sales staff who thought I was crazy. But, at the end of the day, it was my ass -- not theirs -- that was going to lose inventment. It is always easy to argue free when you are spending other people's money to give away stuff.

    It's nice to see bloggers putting themselves out there about getting paid. (Brogan, Godin, etc) Nobility is one thing, poverty is a whole other horrible. Free has always been a myth.
  • I'm there, too. I charge for my consulting sessions. They can do what they want with the data, and I give them lots of value that they can use with other folks, but I charge for it.
  • Thank you for writing this, and for putting it so succinctly. There is value to money, there is commitment that goes along with money, and there is value in a fair exchange when money enters the picture.

    Sometimes interests can align enough that a fair trade can be reached without money turning hands--exposure for an upstart, a cause that can act upon the advice being proffered--but more often than not, money makes things cleaner, simpler, more obvious.

    And as someone who's run numerous events (not as many as you) I find that the overall experience is so much better when there are price tags--people show up reliably, people want to get something for their money so they pay attention more, and people who just want a free drink aren't in attendance. Instead of "getting a deal" the emphasis becomes getting and sharing value.

    A-frickin-men, Chris.

    And if those reading the comments want to get all philosophical on this topic (perhaps I shouldn't go there), there's no more classic and powerful speech on why money should be exchanged than this one from Atlas Shrugged. Regardless of what one thinks of Rand, this drives the point home: http://www.capmag.com/article.asp?ID=1826 .
  • You're right about alignment and value. Product producers know this. Sometimes, giving something away for free (like software) to a friend means that they'll talk about it for years to come. One never knows.
  • As the old adage goes "you get what you pay for"! Beautifully written Chris. Being in sales for awhile now, I see all sorts of different personalities. For the most part, most people do not give value to free services. Human nature - we take FREE for granted. We know that "free" will be there when we get to "it".
  • This is a great post. The question of the "value of 'free'" really applies to so much, and especially one point made in the post — 'free' encourages waste — really hits nail on the head. By charging even just a nominal fee, you communicate a value of the service, and more importantly, you force the "service consumer" to stop for 1 micro second to think about the perceived value and whether it is valuable enough to actually go ahead with the purchase. That last step alone will automatically weed out the "I-have-too-much-time-and-like-free-stuff-but-will-never-buy" consumers from the real customers.

    However, I do think that "free" has a place — it can be used to "thank" existing customers.

    Just my $0.02 ..
    -martin.
  • Chris,

    Thanks for bringing attention to this important topic in your blog. In The Business Owner's Ultimate Guide to Pricing, there is a section in Chapter 1: Stop Cheating Yourself called Free Work Isn't. Because it's not. For the very reasons you speak of and many more.

    Entrepreneurs like us work hard to deliver good value. We have families and ourselves to feed. If we give away our knowledge (which cost a lot of time, money and effort to acquire) we can't provide for the necessities of life.

    Like you, I love helping others succeed in their businesses by sharing what I know. But I have to eat too.

    Here's the kicker. Great care was taken in putting the definitive guide to pricing products, programs and professional services together. In 74 pages folks will learn more than 55 things about pricing themselves that is going to improve both their revenue and their self-esteem. For just $19.95! The details are all here:

    http://www.howtoloveyourwork.com/id4.html

    Why wouldn't a person invest in learning all about pricing? It sure seems fundamental to running a successful business. Well it could be they believe all information should be free. (But in my experience, even when it is free, they don't consume or use the information as much as one would expect.)

    But maybe it's simply because they don't value themselves or their work enough to take care of business by spending time and money on their own education. And are using having to pay for it and not having any money as an excuse for it.

    We'll keep putting ourselves out there and making great books and training available at very reasonable prices but it's the old "you can lead a horse to water but you can't make him drink". I guess folks just aren't thirsty enough yet.

    Linda M. Lopeke
    The SMARTSTART Coach
  • I like what you said.
  • Great that you're sharing resources. It's a good point. If we're not in the pricing game, why not?
  • This is a GREAT post, and an important reminder to us all Chris!

    You've given your audience LOTS for free over the years, and as someone who has benefited from your writing, your speaking and your advice I thank you. That said, you can't eat or shelter your family on free, I know this is how you make a living.

    Yesterday's post had a line in it that's worth repeating here: "never wring your hands about charging for experience. Your mechanic doesn’t. Your dentist doesn’t. Your housepainter and landscaper don’t."

    YOUR contribution is valuable Chris, NEVER wring your hands about charging for it!
  • When people get information or your services for free:

    1- they don't appreciate it
    2- they don't do anything with the information/product you gave them
    3- they don't value you
    4- they are the WORST customers ever
    5- this causes you to lose value in yourself and what you have to offer

    I learned all of this the hard way. My worst customers, in fact my ONLY bad customers, have been ones that I've given away things to for free. Never again.

    Thanks for this post! People need to hear this!!!
  • I worked on a company as a founding partner for free (believing that I would start getting compensated in the future.)

    This is also problematic because the others did not value the time or skills that I acquired and did far less than myself.

    I gave value over the expected and they did not meet goals that they themselves set!
  • This is so true, a lot of times people don't appreciate it. :/
  • I watched your live feed from the Nashville Author's Way event and I remember you had pointed out that you should give your services and product away 98% of the time. That last 2% would be the most profitable 2% because of your generosity and ability to prove you had a worthwhile product in the previous 98%. But it's a two-way street isn't it? There is a "give a little, take a little" expectation. No one wants to feel used. When you're disrespected you lose all obligation or willingness to continue helping someone.

    I don't think anyone would disagree with me that when we do something for "free" that it's not without some personal gain in mind. We may jump through a lot of hoops at our own expense (as in your example, Chris) but something in the back of our mind acknowledges some form of compensation is expected to come out of it.

    I have experienced transactions where I get burnt out on hand outs and it's never pleasant. They would lure the cow in by asking for a cup of milk when they had really intended to milk it dry all along. And I've just compared myself to a cow.

    It seems like it boils down to authenticity. Both sides need to be straight up about what the expectation is during the course of negotiating the terms. Secret expectations aren't beneficial to anyone.
  • I loved your comments and you made me think, and then I laughed out loud because you threw in, "And I've just compared myself to a cow."

    : )
  • The "cow" bit did it for me too.

    My husband was born on a kibbutz and his English was not good at one point.

    That did not stop him from doing and auction and for lack of better language skills he told a bidder that getting money out of her was like milking a COW!
  • charlesgupton
    Wow. Wow. Wow. What a great, succinct post.

    As a photographer. I get 4 or 5 "offers" per month to do pro bono work or even commercial work in which the client has no budget but will give me a lot of exposure through a credit line. After 30+ years of working I've learned not to let my jaw drop open nor laugh out loud.I've also learned NOT to be defensive nor egotistical.

    But, I still occasionally find myself asking them how business people who create intellectual property should make a living if they give it away for 'free'. Regardless of the tools used to sculpt the ideas, it's the idea and the ABILITY to sculpt it that has the value.

    I seldom ever hear a speaker or writer present a profoundly new idea. But I'm often amazed at how new an old idea is shaped so that I can understand and apply it in a new way. That holds great value.

    Many of the ideas presented in "Trust Agents" can be found in other places. But HOW they're presented in "TA" gives me value well beyond the price I paid.

    We really do value the benefits we receive for a service when we've invested something we value in exchange for them.

    Charles Gupton
    http://charlesgupton.wordpress.com
  • Hi Charles- I got that model (use the same old ideas in new ways) from Dr. Stephen R Covey. The 7 Habits of Highly Effective People is similar. It's just wisdom. And yet, it changed my life.

    Not thinking TA goes that far, but hey. It was my first baby.
  • The concept of paying for value applies to special event fundraising as well. When we looked at the run walk ride type events that we power at Convio, we found the most successful events are also the ones that charge a registration fee. Not only does the fee help offset the cost of the event, but it sets the tone for the participants to also be fundraisers. People who have to pay to be a fundraiser are much more likely to actively fundraise.

    I chalk that up to human nature. I paid a lot more attention in the grad school classes I paid for than I did in the undergraduate classes my parents paid for.
  • Good point. Recognizing the value of what you pay for is key.
  • Chris,
    "Marv" article. I have built up a local Meetup of about 180 people and we discuss monthly advice on SEO & social media tips......for free. However I have mulled over this very subject. Weeks ago Aaron Wall (SEO Book) wrote a similar post as yours, and discussed when you have your events, or Meetups are free, it "De-Values" the information and they then expect everything for free...spot on with what you expressed. I like free information, and giving it away at my Meetups, but I have realized I spent 6+ years learning "White Hat" SEO, paid to go to Danny Sullivans events, PubCon etc...It has to be worth something right?
    I just want to say thanks again for validating my thoughts, and helping me shape future Meetups!
  • Chris,

    Thanks for a thought provoking post and excuse the longwinded comment, but you triggred just so many thoughts.

    I think we are all partially guilty for having dug us in this hole of "free". We have blindly followed the model that attracting audiences will attract adverisers which then will pay for the audience and not covering only our costs but leaving us with a profit. This works for some (e.g. Google) but for the majority "free" is an additional challenge to their business model. We cannot turn back the wheel and better start to live with the phenomenon.

    The key for being paid is providing perceived future in use value which is greater than the cash value we ask. Especially with intangibles, potential clients are very sceptical about the in use value they will get; understanibaly so. Just look at all the self proclaimed social media and other internet experts promising us an easy way of running a lucrative business from home. Too many of those offerings of advise bring (or brought) money to the expert for selling his/her ware. Most of their customers though are still waiting for seeing a minimum return that would cover at least their inital cost.

    Moaning is no remedy for the situation. We have to live with it and factor it into our business models. Here are just a few ideas for busineeses selling intangibles: Giving a basic service for free, but making really valuable components payable at a price that a fraction of the users allow us to run a profitable business. Offer a money back gurantee if the customer did not perceive the promised value. I use the word 'perceived' deliberately here as it will always be a subjective judgment. Allow the customer to pay in two installments; a portion for access (non refundable) and a portion after the event ( refundable or variable based on value perceived).

    We also have to have a benchmark when we can ask for money for services we provide. Irecently heard about the following rule of thumb which makes a lot of sense to me: Make sure the potential customer cannot find a similar offering for free. Maybe this could be an otther criteria for a refund policy. If the customer can proof having found a comparable offerig free that you would refund the price you charged for your offering.

    Last, a consolation. "Free" is not always to the benefit of the consumer. If the fact that an offering is free draws more interest than you can handle, the customer experinece is negatively impacted. This can also be turned into a reason for asking a price because this allows you to avoid that potentially nregative customer experience.
  • I like what you said.
  • Well spoken. Thanks for all your thoughts, and I really appreciate all your ideas. I'm learning from your comment much more than I am from my post. (And others.)
  • Chris,
    Thank You!

    Recently, I had one of those "What the heck am I doing" moments. As more and more people learn about my expertise and my transparent style concerning how I approach my franchise consulting/matchmaking business, I decided that I, too, bring value to those who call me and email me for advice, and I need to be charging for it.

    For years, I wasn't charging for consultations, because pretty much no one in my industry does. (Our fees generally come from the franchise companies we place new franchisees into)

    But, 3 months ago, I changed that. I charge a "commitment fee," and it's even refundable in certain cases. (Top-Secret. If you work with me, you'll find out how it works-and it's quite positive, actually)

    I even went so far as setting up a site in which all the folks who want questions answered about franchising can ask them. The 1st answer is on me, then if they want, they can set up a phone consult, for a nominal fee. This is the site- http://www.AskTheFranchiseKing.com

    I said fee, not free. It's working out pretty well.

    Chris, we bring value. I don't mind a short chat with interested parties, but if they really like my style, and feel I can help, then they will pay me for that help.

    We never have to apologize for charging anyone. Unless it is just plain wrong to do so.

    See you in Vegas!

    The Franchise King
    Joel Libava
  • And that, your highness, is why you're the franchise king. : )
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