Before you give away free stuff, consider all sides of the equation.

Many businesses new and old give away free products to grow their market share. Giving away free products to woo new customers to your business has both its up side and its down side. Before you decide one way or the other you should carefully examine the pros and cons of giving away your company’s goods and services free of charge.

Pros

First examine the benefits of giving away a product for free:

  • · People who would not spend money to learn about your product are introduced to it.
  • · The recipients of the free products generate word-of-mouth buzz. A good example of this is the $5 PayPal gave away when they first got started. As more people learned about the free money, more people signed up for PayPal.
  • · Recipients of your free products will continue to purchase the product if they find that it fills a niche in their life.
  • · Unlike a coupon that only appeals to people who already have some interest in your product, giving things away for free encourages people who otherwise would never buy something from you to check out your company.

Cons

Giving away free products isn’t a magic wand that will hve customers banging down your door. On the contrary, there are a number of down sides to giving away products for free. These include:

  • · That which is given away is often not respected. Think of all the free samples of Tide you’ve received during your lifetime. How many of them did your laundry and how many of them ended up in the garbage, unopened?
  • · Several groups of people will use your product once and then never again once they have to pay for it. This includes people who are interested in your product but not terribly impressed by it, as well as people who cannot afford your product’s price point.
  • · Sometimes giving things away can have an air of desperation about it. Desperation in marketing is poison when it comes to branding. Fewer things will tarnish your brand image quicker than looking like you will do anything to get new customers.
  • · You might actually take a loss on giving things away. Remember that what’s free to a potential customer is a straight loss for you unless you offset the freebie with sales over the long term. If your product fails to catch fire with the public after you give away samples.

To Give Away or Not To Give Away

You should carefully consider whether your free samples will be a net gain or a net loss for your company over the long term. Once you have given the samples away, you can’t get them back. One alternative to giving away free products is to offer “buy one get one” deals or sell products for a nominal price, such as a dollar. Anyone truly interested in trying your product can certainly pony up a dollar for the privilege. Such schemes are ideal for weeding out people who aren’t interested and making sure that your company doesn’t lose too much up front when you try and attract new customers.