The other day I was asked this on my newsletter questions page: “You appear to give away a lot of FREE information. How do you make your money from doing this?” That’s an excellent question. And, given that coincidences happen, it was no surprise that a similar issue came up for discussion in the masterclass I ran this week with my colleague Derek Arden. One of the delegates asked what value was there in something free. Surely, they suggested, people would perceive it as valueless.
So, tell me, what would happen if I took your mobile phone away from you? Could you work in your business as easily? Is it possible that without your mobile device your business would suffer, even a little bit? The chances are it would. If I were to ask you what value your mobile phone had for your business, could you put a figure on it? Perhaps not straight away, but it would be feasible to calculate the costs of not having a mobile phone. For most businesses, this would be several thousands of pounds.
You already sense the value of your mobile phone, even if you cannot precisely say what that would be. And that’s the same mobile phone that cost you nothing. Like most mobile phones, it was almost certainly free. You hold in the palm of your hand an item that is free, yet at the same time has immense value for you both personally and for business. The notion that we don’t value free things comes from the fact that most free things are, indeed, valueless.
I remember doing some work with a burger chain a few years ago – not the one with the golden arches – but a long-established competitor. The CEO of that firm who I was supporting told me that McDonald’s did not pay any more than 24 cents for the toys that went into a Happy Meal. The toys were so cheap that even a small child didn’t value them. They played with them for a short time and moved on to find something more enticing. Yet give a child a free iPad with their Happy Meal, and they would be playing with it for years afterwards because they valued it.
Free items are not valueless; they can have high and significant value. However, the value is not associated with the price (which is zero, or near to nothing), but in what it means to the individual.
What this means for your business is that the provision of items that are free-of-charge, but which have high perceived value to the visitor can help connect people to your business without them needing to spend money. As an example, take my Blog Content Planning Tool. This is a free spreadsheet-based tool which allows you to plan your web content for the month ahead. Similar items are available online, but some cost as much as $75 a month. Mine is free. So you must think I am bonkers when I could be selling it and earning thousands of pounds a year from it. Except, if I were to sell it at, say £25, then that’s the value people would give it. By making it free, the perceived value can be much higher. As a result, people who download my toolkit become the most likely to buy my Content Strategy and Planning Service. The free content triggers a much more expensive purchase, but only because the free item is valued by the recipient.
Let’s imagine you run a business which provides training courses on presentations skills. You could offer a no-cost ebook full of hints and tips on business presentations. However, those kinds of things are ten-a-penny. They are both free and valueless. But what if you provided a no-charge PowerPoint critique. People could email you their slides, and for no fee whatsoever you would give some useful feedback on the slides. Would that be a valuable service, even if it were no cost? Of course, it would. And if your business provided that service, which firm would people want to use for their training in the future? Suddenly, that free service becomes a useful source of revenue.
Free items can generate income as long as the stuff that is free is valued by the recipients. If all you do is churn out cheap tip sheets, or five-page e-books with generic content, your free items will not be appreciated. It is entirely possible to make money form free items, as long as those free things have high perceived value. The recipients of these items will then be connected to you in such a way they are much more likely to buy from you.