The true cost of free

Easy, yes. Advisable? Maybe.

So it’s finally happening. Last summer, I heard a radio interview with somebody from News International, who said they were considering charging for access to the online versions of The Times and The Sunday Times. They were confident that people would pay. Not me, I thought to myself. Not in a million years. Why? Because I’ve been reading The Times online for free for over 10 years. And it’s good – but not that good. And if I’m honest, I’m a bit of an online tart, so I also spend quality time with the Daily Telegraph and The Guardian (or if I’m in a more exotic mood, Le Figaro or Le Monde). And then last week, the story was confirmed. From June, it’ll cost £1 a day or £2 a week to read the papers online. I wondered what the reaction would be. I’m often out of step with the popular mood on these things. Perhaps other people – real, sensible, grown-up people – would think it was a good idea, and made sound economic sense. After all, The Times gets 20m unique visitors a month. If even 5% stay with them, that’s a million people they can ‘monetise’. Or perhaps not. When I last looked, the story on the Times site had 472 comments, most of them negative. Some very negative. And when I clicked on the ‘most recommended’ heading, I saw that a whopping 3,500 people had recommended the top comment. Which tells you how consistent the response was – for every one person posting, eight were simply agreeing with the most recommended (self-perpetuating, I realise) comment. If I were James Harding, the editor, I’d be worried. Very worried.

Free and easy

Giving something away for free is a great way to attract people. But once they turn up, what do you do then? A sprat to catch a mackerel is fine: you give a free e-book, or a free hour’s consulting, or a free website critique, because you hope to pick up more, bigger and paid work. But if you’re giving away everything, as The Times was, then you’ve got a big problem. It’s all a case of expectations. Do you charge for your time? I do. So when somebody says “Let’s get together. I’m in Brighton – where are you?” I realise three things. First, they’re a ‘meeting person’. Second, they don’t value my time – or at least, they’re not prepared to pay for it. And third, they haven’t checked on my website to see where I live and work (I’m often tempted to say “The Isle of Lewis. Why? Where are you?” to see what their reaction is.) And almost every time, when people realise there’s a price tag attached, the meeting effortlessly morphs into a teleconference or a videoconference. Which is free, of course. The thing is, people value what you value. Just the other evening, I had a second helping of pasta at a friend’s house (tagliatelle carbonara, since you asked). And as I twiddled my fork, I suddenly thought how odd it would be to ask for seconds in a restaurant. “Was everything OK?” the spotty waiter with the off-white shirt would ask. “Yes, absolutely delicious,” I’d reply. “In fact, it was so good, I’ll have a second helping.” “Certainly, sir – that’ll be another £11.50. I’ll be right back.” Free. £11.50. It’s all a matter of context.

The naked truth

Would you walk down the street in skimpy underwear? Of course you wouldn’t (if you would, you should consider seeking help). But what if that underwear was actually a bathing costume and the street was actually the pathway down to a shimmering blue pool? But that’s different, I hear you say. Is it really? Or is it simply a case of perception? You’re still as naked, but it’s just a matter of how it feels. Free is the same. It’s a perception. You have to create the value first, before you can give it away. And if you do go down the free route, remember a few basics:

It’s a powerful weapon, but it should be used sparingly. Once, I worked for a company that constantly bundled ‘free’ software with much more expensive software. So often, in fact, that it came to be the norm. And when the freebies disappeared, guess what happened? That’s right – the paid-for software sales fell of a cliff. Now in reality, the free software was a gimmick, and probably sat on people’s shelves or on their hard drive – either way, it was unused. But it had the magic word ‘free’ attached, and that creates value. Taking it away has consequences.
It works one way only. You can make something free that you’ve charged for, but it rarely works the other way around (as James Harding may well discover in June). Lotus, the software company, makers of the iconic Lotus 1-2-3, gave away their word processor, Ami Pro, to boost sales way back in the 90s. Then, they decided to start charging for it. Charging? For free software? You must be joking, thought customers. And nobody bought it.
It should really be free. Not FREE* or Free (++) or even FREE^^^. If you’re going to hem in your offer with endless terms and conditions (what’s the difference, by the way?) then you might as well think of another offer.

So free is easy, but not that easy. You should think long and hard before you start giving things away, and make sure you have an exit strategy. Much as I have with The Times. There’s still another two months to go before everything disappears inside a walled garden, but I’m already weaning myself off their columnists, correspondents and diarists. Easy come, easy go. And I’m going. Happy Easter. Find out more:

Pay dirt: The Times and The Sunday Times to charge for use of websites from June at The Times online (but not for long).
Bargain basement: Free: The Future of a Radical Price: The Economics of Abundance and Why Zero Pricing Is Changing the Face of Business (phew) by Chris Anderson, who also wrote The Long Tail.
Give and you shall receive. Don’t know what to do with all those embarrassing A-Ha albums? Try Freecycle.

Kevin Communication, Marketing, Pricing.