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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  • 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.
  • 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.
  • 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.
  • 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!!!
  • This is so true, a lot of times people don't appreciate it. :/
  • 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!
  • Free stuff is great, sure. Everyone likes to get a freebie. But when it comes to our livelihoods, "free" just isn't part of the equation. I love your point about paying for something being a motivator for showing up. When you PAY for something, you've made an investment in it. When I first started teaching classes, I would collect money from attendees at the class. Once I started requiring payment in full in advance, I found that my attendance levels went WAY up. Lesson learned.

    There are many times when I'm happy to give for free. I enjoy helping other people when and where I can. But my time, effort & hard work is valuable, just like everyone else's. I make no apologies for wanting to earn a living. I love what I do, but I have costs just like everyone else. Kids, mortgages and, yes, running a business all take money. Free simply won't cut it.

    So, sharing is great. Free is nice, to a degree. But there comes a time when you have to invoke the Power of NO and stand up for what you're worth.
  • Re: "Free is beautiful, and costs are part of life."

    There's comes a point when you have to step up and feel confident enough to ask for the business (charge a speaking fee, charge a client for a project and charge your worth). If you're not confident in your abilities, then entrepreneurship perhaps isn't the way to go (you won't make a living at it). I'm not being negative, it's just a fact of life. No?

    Re: your recent incident with the change of date on the event, I'm sorry. I recently confirmed a company to speak at an event (I introduced this company to the host of the event at the host's request). The host confirmed that they'd love them to speak (I passed along the message). I got a call yesterday from the company saying they never received confirmation so I checked in with the host. The host responded with, "Oh yeah, sorry we won't be needing them anymore." I don't think I need to tell you how that made me feel.
  • thomsinger
    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.

    This is an important topic you bring up, as there IS a time and a place for free (non-profits, good causes, loss leaders to open doors, etc...).... but to expect that others will give you "free" things is not right.

    I wanted to attend a conference recently, but could not justify the expense. I knew the organizer, but I did NOT ask for a free ticket. Had he offered I would have attended. He did not, so I skipped it. I would have felt weird asking for "free" with no value to return to him.
  • Chris, great post -
    You are often a proponent of giving some things and ideas away for free and you make some excellent points on why you need to do this to build trust and credibility. I've always been generous with my time and ideas as well and at the same time believe the business axiom 'when something is free it has no value.'

    I've noticed the overwhelming number of 'free' webinars lately and have found that I'm more willing to value the webinars that cost $99 or $199. The content of these may not be better than the free ones and the attendance smaller but the presenter gets my trust a lot quicker. The free webinars, even when given by folks who just want to share, always throw up a fear of being sold to.

    Thanks,

    Thomas
  • I just wanted to give you a tip on MarketingProfs Digital world - they held 2 full-day webinars (spring & fall) complete with exhibition hall and seminars. COMPLETELY free - and very qualitative with less "sales" than your average conference (at least in my business) :)

    I can understand if you've had bad experiences and therefor are skeptic towards "free" - but I do think the relationship building activities that go on for free (blogging for instance) will only increase, and with time the companies that do "free but with a catch" (like over-selling) will get weeded out.
  • Dolly - you are right. I myself have been to some free webinars and sometimes the content is good. I've also paid for some and the content is always better (in my industry - franchising and home staging.)

    I think it is OK to charge and charging should not be seen as 'bad.' I think you can get paid for your time and provide value, too. I have a friend, Gini Dietrich, who has an awesome PR and communications firm in Chicago and she always says 'people love the free stuff but as a business owner, I need to make a living.'
    If you provide value and you are really good, I think charging does weed out some of the noise.
  • Dear Chris, thanks so much for linking to my post. I am delighted to see that we agree on the principles and on the fact that giving away things for free results in people devaluing our work.

    I'm proud of the work I've done for free for the social media and tech community in Vancouver, and I've earned my badge of honor. The consulting I do costs because my brain needs protein and carbohydrates to function, and those aren't free. They have to be bought. It's a transaction :)

    Thanks again!
  • You're good people, Raul. Thanks for the kind words. : )
  • I think people are so unwilling to pay for many things because of the way they've been conditioned in the past. Take the music industry for instance, I'm no longer looking to shell $15+ for a CD I've never heard before because I've been let down too often - one great song and ten filler tunes.

    The fact that you can find many things for free actually helps to have a more optimal marketplace for customers. You really need to provide value & quality in your product/service in order to get income from it. Since your competition may be producing a similar thing for free, yet not exactly high-quality, it gives you even more of an opportunity to say "hey, I've got what you want and mine is better!"
  • romanythresher
    Love your post, from having to organise a few events myself on behalf of others, I can resonate. No one wants to pay to do anything and it becomes a real challenge.

    While there are many ways one can promote events for free and if I can help I will and often promote other people’s services, events etc. and try and put people in the limelight where I can but then you come across some people who come to you and want it all done for free, they drain your time and energy put you under tremendous pressure to try and get things organised but not prepared to spend a dime on anything. Don’t want to spend money on catering, don’t want to spend money on the venue, don’t want to spend money promoting or pay for artwork, brochures or banners.

    I cannot create miracles, sometimes I can but seriously people need to be realistic and realise that people need to earn an income, people need to pay staff and just cannot possibly have it all for free.

    I am often blessed where people offer to do things for me at no cost but then I do my very best to always give back 10fold. Now I think to myself, should I have used my resources to help someone else out, at what cost to me and my contact because now I realise there is absolutely no benefit to me or my contact whatsoever.

    This also comes with community sites. Yes, I think there should be a charge to join community sites and yes I agree with everything you said about it creating value and it also creates value on the back end. It takes money to run a community site, hosting fees, development fees licence fees and sometimes staffing fees, monies received can be used towards further development and having the resources to build better communities.

    I do understand times are tough and sometimes the budget is limited but then see if you can somehow exchange services to make it fair. If someone helps you to do something and you have a skill you can offer in return, offer it, justify the costs and make it fair.

    Anyway, this is my rant for the day.
  • The two most important factors to consider on this topic are marginal costs and value. As Anderson discusses in "Free," prices tend to fall toward their marginal cost. Since bandwidth and storage costs are approaching zero, you get the flood of free online services we are enjoying right now. My observation is that there are many "social media consultants" right now who seriously overestimate their value. It seems like much of the blogger crowd has devolved into a Hollywood-esque clique of elitists who spend their days telling one another how wonderful they all are. People will only buy that crap for so long. There are clear thought leaders like Chris and Godin and a few others, but I see a lot of whining going on right now that strikes me as people who are largely overestimating their own value. I like sports analogies and there is a famous quote from Bill Parcels that postulates, "You are what your records says you are." In this case, I would suggest that "You are worth what your customer says you're worth."
  • Denis
    Jon, while bandwidth & storage are very cheap, somebody still has to develop the service. That costs money. Most free online service right now are supported only with their venture capital and are in negative cash flow only because they think that the larger the audience is the more advertisers will be willing to pay for it. Ad-supported business is good only when the costs of developing and running that business are low because ads don't pay as much as people think they do.
  • Chris,

    There is a type of "free" that is not mentioned in your post. I'm talking about the pro bono variety of free. I am constantly confronted by the upcoming generation of leaders with the attitude that the way to give back to society, the way to be charitable, is to be successful in business and then, once rich, give money to worthy causes.

    Those of us who are not rich but have something to offer, services or time, need to step up and do it now. The need is now and it can't wait until riches are achieved. Pro bono work is free - it can be working in a soup kitchen or it can be providing social media (or legal in my case) consulting services to non-profit organizations. Its a moral obligation not a marketing gimmick. Its rewards are less tangible, harder to articulate, but very real.

    Pro bono free is sometimes audacious but almost always beautiful.
  • Great point, Stephen. Free can be for a charitable and worthy cause. I appreciate that perspective. Thanks for adding it.
  • Thanks Stephen for mentioning pro bono services. I have been advocating it for the real estate profession: http://bit.ly/sr8Uk

    Certainly agree with you, Chris. Also agree with the other Chris (Anderson) that Free is not "a" business model (his title implies free is a business model, but it's not the essence of the book). Free can be "part of" a business model and he cites examples how to use free to make money.

    You could make your conference free if others (vendors, advertisers, Starbucks) paid to be there. Just my 2.5 cents.
  • I do pro bono for two clients --- I barter their services for mine; but only services I really need. Why not "get something in return"?

    When I do "free" it costs the NFP advertising space, newsletter ads, BOR sales, a hotel room, etc.

    We have to put a price on free when it comes to business.

    I do volunteer personally -- but NOT for business. And everytime I go against my own rule, even giving deep discounts to folks, I end up with "clients from hell" -- not worth it.
  • I guess you've made my point a bit. Pro bono is not "in exchange" for anything. You should not have any expectation of remuneration for pro bono work other than the benefit you bring to others. Make the gift - you pay the price to bring your service to the non-profit - the "gain" needs to be measured differently in a give of this nature. Don't try to put a price on this type of free and you may find it is more worth it.
  • If you ask for something and people are willing to help you for free you need to be extra careful to treat them with respect. They could be earning money instead so try to appreciate what their doing for you. At least I feel this way. Don't get me wrong, I believe in helping others and I do were I think its appropriate for free. After all being social is about helping each other. If I can do so without having to spent hours on it you'll get it for free.
    Your solution to this by offering a "free" speach for a number of sold books therefore seems very good to me. Both sides benefit from it. You scratch my back and I'll scratch yours.

    @romanythresher
    Ning for example has more than a million communities but all for free. If they would charge fees people would actually think before they sign up to dozens of communities they never visit again.To be able to charge a fee for community membership you need to offer valuable content. Creating this value is the most difficult part it seems.
  • Free labor. Now that's a good point. I didn't write much about that, but that's probably another whole thing to think about. Especially when companies ask us to do things for free.
  • This is a cracking post Chris.

    Timely, too, with London's Evening Standard newspaper announcing that it is going to now be free. That's a paper that's been going since 1827. I realise the newspaper industry is struggling, but producing a (print) newspaper is not free. Plus they're adding 250,000 to their circulation. It's doomed to failure.

    Free absolutely has its place, certainly in something like digital media - make one MP3, and you have an infinite amount to sell with no additional production costs. You *can* afford to give it (or a lot of them) away for free.

    And of course, Google has given pretty much everything away for free, but they created a world-beating advertising model that allowed them to do this.

    Free typically doesn't work in 'real world' commerce and business. As you say, if you start free that's typically what people will always expect. I've had many interesting responses to my poll asking my readers whether they'd ever pay for cool extra features on Twitter. About 25% say they would, which suggests there is something of a market there, but the 75% who won't are pretty heated about it. I wonder if tomorrow Twitter suddenly started charging even a low amount like $1/month (for better features), how many of those 25+ million users would never log on again?

    There's a very fine line between freemium and 'you get what you pay for'. And I think it's going to be a heated contest, certainly in online business, for years to come.
  • Spot On.
  • Hi

    Free has not worked for me in the past. Not free sessions when I was practicing as a kinesiologist and not a free app on the web.
    It makes me very sad to say that I find there are a lot of "takers" out there. Hope I don't sound (too) cynical.

    Juliet
  • nickstamoulis
    Hi Chris,
    This is a brilliant post and I agree with you...I have always seen a good amount of waster when running free workshops (as in people that are not their to learn) vs paid workshops...

    Anyway, I referenced your post in my SEO blog at the following link:
    http://www.searchengineoptimizationjournal.com/...
  • Stunning.

    Chris, you know I've been reading you forever. I've written on free and its opposite, the 2.0-demonized Return on Investment, any number of times—in fact we're back to talking about it in my comment section this week.

    I loved Free (the book). I love free (the concept). But the fact that we must pay our staffs and feed our kids is not an evil. It's a reality, and folks who are collecting paychecks and then whining about wanting everything for free are not just missing the point, they're being disingenuous about how the money got in their own bank account this week.

    Freeconomics is a dangerous misunderstanding of one part of the marketing mix.

    Anyway, as a voracious reader of everything free and not, and having read pretty close to every piece you've written here, I just thought I should say:

    Best. Post. Ever.

    Regards,

    Kelly
  • Thanks, Kelly. Coming from you, that means extra lots. : ) Know what's funny? This sat around as a draft post that I didn't put up for MONTHS. And then I deleted every word of the post that was there, and wrote this. The title alone was what had my attention. Oh, and someone pissed me off. My best posts are when I'm mad.
  • scottkargman
    Really well said Chris!
  • Thanks, Scott. : ) You know that free doesn't work well. But then again, we keep trying hard to make it work, right?
  • scottkargman
    We do, but with obvious ulterior motives :-)
  • davelutz
    Chris great post! Hybrid Conferences (defined as both having both live & virtual participants) is a game changing trend in the face2face learning business. Here's a link to an article that I wrote for PCMA's Convene magazine that discusses Free content for supporting future Live Conference attendance. http://www.pcma.org/Convene/Issue_Archives/Sept...

    Would love to hear opinions from others on tactics or strategies for driving paid event attendance.

  • whitneyhoffman
    Podcamp Philly is this weekend, and we charge $20 to attend in advance, $25 at the door. All ticket sales go to a local charity- this year, Covenant House, to support homeless youth. While this may seem like mandating a charitable donation, we look at it this way. The team works hard to put together the event, and we want people to place a value on the experience. We set that minimum value, but since our costs to produce the event are low and covered generously by our sponsors, including Blubrry, Microsoft, Springhouse, and A Weber, we decide to use the value of the experience to help out others in our community- a "pay it forward" concept to keep the sense of community alive beyond our event itself.
    The monetary value is somewhat arbitrary, like a co-pay at the doctor's office, but it makes people think and commit before signing up for an event. It makes planning easier, (although with our massive inflow of attendees here at the last minute, the coffee may run out sooner than we'd like) and we've seen sign ups versus attendance numbers change dramatically from near 50% to well over 80% consistently.
    I thought Seth's post was brilliant- in that we add a monetary value to create friction, to make people think, to make them choose rather than just go with the flow. Dan Ariely has done amazing research in behavioral economics that proves the point over and over again that valuation changes our perception of the quality of a product as well.
    Free invites everyone and reduces the friction or hurdles to participation. But sometimes, jumping a few hurdles has its own rewards as well, including ensuring that the people who are there are opting in with both their time and their wallets to the larger community. They've all "pre-qualified" and said this event is worth their time and their money, and you have, too. Everyone there is serious about learning and meeting others and sharing- there are no tourists.
    The small charge we have instituted for some (but not all) Podcamps creates a quid pro quo among the community that I have a hard time viewing as a bad thing. Especially since we're dealing with a non-profit oriented group helping other non-profits make the larger community a better place to live. And as someone once said "We can't all do great things, but we can do small things with great love."
  • Have a great PodCamp, Whit. You're good people, and thanks for your added points here. I'm happy you're part of the team. : )
  • janinemcbee
    Well said. There is a time and place for everything. There are times when free makes sense - when objectives, relationships, and resources align. Even when free makes sense, as you stated, there are usually expenses incurred behind the scenes. At some point, dollars are moving around.

    In addition to price, value is subject to perspective and expectations. Whether free or not, I'd challenge people to evaluate education opportunities from three perspectives: 1) Did I learn something new that I can apply or take back and teach others? 2) Was a current process affirmed? 3) Did I learn how/why something should not be done a certain way, including how not to present the information to someone else?
  • Chris - Really great post. Having run conferences for years, I completely understand the costs. You are spot on with your opinions and I think the way you laid them out here is exceptionally well done. The fact that someone moved a conference, or even an agenda slightly on you, and did not contact you, is just plain unacceptable and bad business.

    Our community is free. We have spent a lot of time and money to build something that has become extremely valuable for our marketplace. We do not intend to charge a fee for membership. However, we do fully intend to charge $$ for some products and services our homework tells us they will find valuable. Free and value added items for fee that folks can choose to buy if it fills a need. Nothing ever wrong with that approach.

    This post is extremely valuable and one I intend to share. Thanks for writing it.
  • richdixon
    This makes a lot of sense, especially from a guy who gives away so much stuff. I learn a lot from you, and all you've ever made from me is that $1.40 for my copy of Trust Agents, which I haven't read yet.

    Seth says there's a lot of ground between the guy who'll sell drugs to 7th graders if it makes money and the guy who gives it all away and lives in the woods on berries and nuts. I agree.
  • Another benefit of "Paid": When talented people can make money by being smart and funny on the Web, the quantity (and quality!) of the content will soar.
  • Chris,

    This post is a great reality check.

    We can't let the real value of events, conferences, products, etc. become lost behind dollar signs.

    Brandon
    @bchesnutt
  • mmyerspalio
    Great post Chris. My first boss told me over 20 years ago, as you've outlined, that negotiating down your price erodes perceived value when trying to charge full price in the future. One of my favorite quotes of his to say to people who were pushing for free and/or discounts was "You can deal with the price issue once or the value issue every time." @mmyerspalio
  • As with most controversies, this is a problem of perception. People want things, and they want them for free, but they don't register that if someone isn't paid to make those things, those things won't get made. Everything has to be paid for by someone at some point in its production cycle or it ceases to exist. And to presume that what's free today can and should always be free is to believe in an altruism that cannot be supported in a capitalist (or communist, or socialist) economy.

    That said, it's also in each individual's best interests to get as much as he / she can for free. If others are willing to undervalue (or invalidate) their own work, so be it. Every penny counts, and one more in my pocket is one less in yours. And even if your freebies won't last forever, someone else's will come along to replace them. The freeloader always comes out ahead.
  • thomsinger
    I disagree with the statement "the freeloader always comes out ahead". I have seen a lot of people get labeled as "takers" and thus removed from even knowing about future opportunities.

    The most successful people I know (financially, emotionally & spiritually) do not feel they need to take all the time. In fact, those are the people who give the most. They do not need to win every time to win.
  • Dammit Brogan, how do always manage to pre-empt material I'm working on, do you have a sneaky little back door trojan inserted into my brain?

    All joking aside, I agree with what your saying here Chris. Well put, (as usual).
  • You make an excellent point. I wonder if those people who asked for the comps, ended up purchasing it in the end anyway. I should think a simple evaluation of the return on their investment might indicate its worth every penny. Its true, you get what you pay for. I'm personally looking forward to IMS!
  • The minute I see someone is offering a "free" conference I immediately wonder what they're going to try and sell me while there. If I see someone is charging for a conference I tend to take them more seriously.
  • Spot on Chris. While I do agree with Chris Andersen that 'Free' can be an option in an overall tier pricing structure, even he acknowledges that free is not really free. It may be free for some, for some level of function, but not free for others. Or, free to the consumer because someone else is picking up the tab (advertiser, etc). I think the other premise that Chris Andersen's POV is based on is, quite frankly, what distroyed the US electronics industry - cost-based pricing. If I understand correctly, Chris argues that if the product or service is free to deliver (zero cost) then why charge for it. I'm more in the camp of market-based pricing or price based costing. As the Japanese auto industry has use to dominate the US market. Set a price the market will bear then relentlessly drive down your costs to achieve desired margin.

    As a technology exec for 20+ years, I cringe everytime I hear sales people resist attaching and presenting a price to their product or service. The customer's reaction is "its free? sure I'll take it. What the hell" Where is the value creation in that interaction? "Customers wont pay for that" (usually before it is even presented to the customer) is the other argument I've heard. Well, if they won't pay for it, the see no value in it. So what are we doing in that business?

    Value assignment is critical in any commercial transaction. This does not mean that discounts, even up to 100% are not a valid end result. But assign the value first. Have your customer understand that your product or service has value. Then you can make the business decision to discount, for what ever reason.

    thanks again
  • You're right. There are places for free, but as a tech exec, you know where all those skeletons hide.
  • I generally agree, but there's a big difference between setting the price based on an item's value and setting a price on an item's cost. Something may cost you more to produce, but that doesn't necessarily mean that it provides more value to the consumer. (Your seminar would certainly cost less if it weren't held at Gillette, but would it be of less value? Presumably not, since the content would be the same.)
  • Free isn't working for me. Not paying the rent!

    Daily free blog posting on two blogs, 100,000 lines of free source code on Sourceforge, availability to people in need of advice and help, pretty much not working at all.

    It's been a good learning experience though. People will pay a lot of money for something they perceive to be of value. The funny thing is that the difference between free stuff and stuff that costs money... is just the money!

    Not sour grapes here... just recognition that free isn't nearly enough. Value has to come first.
  • 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. : )
  • Thank you, Chris...
    I am the King. (Until I get home, of course)

    JL
  • 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.
  • 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.)
  • I like what you said.
  • 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!
  • 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.
  • 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!
  • 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!
  • 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
  • Great that you're sharing resources. It's a good point. If we're not in the pricing game, why not?
  • I like what you said.
  • 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.
  • 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".
  • 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.
  • nicolefiliatrault
    Reality check - thanks for hitting the nail on the head. Free is (or can be) the other cost.
  • 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.
  • 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.
  • 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.
  • 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 ;-)
  • "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?
  • 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!
  • 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.
  • 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.
  • 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.
  • 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.
  • 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
  • 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. : )
  • 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.
  • 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.
  • 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
  • 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.
  • How about hugs? Can I pay you in hugs?
  • 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.
  • 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?
  • 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.
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