Why Do Some Companies Give Stuff Away for Free? 

All businesses operate to make money. Even “non-profit” organizations need to consider the financial aspects of their operations to ensure that they can continue to operate. To make a profit or a “surplus”, companies will sell products and services for more than they cost to buy or make. Without doing this, they’d quickly run out of cash and then go out of business.

So it may seem rather odd that some businesses are happy to give away a product or service for free, since it wasn’t free for them to make, and is, therefore, costing them money. However, there is solid rationale behind this and, if it’s done right, it can actually help companies increase their sales and, therefore, their profits.

Letting Customers “Try Before They Buy”

Sometimes, the best way to sell your product or service is to let it do the talking for you. If what you’re promoting is of good quality, solves a problem, or is entertaining, then customers are likely to see its value just by using it.

That’s why many companies offer customers the opportunity to try their product or service for free, usually with a limit on the length of time or number of uses they have before having to pay. In online casinos, free spins are a common form of promotion that can let new players try out the company’s software and selection of games before deciding whether they want to make a deposit.

These try-before-you-buy freebies usually come in two forms. The first is a free sample, which usually works best for physical products. The second is a free trial, which is more suited to services or products that are bought on a regular basis.

Manufacturers of food and drink products will often give away free samples of new products to encourage consumers to try them out. If they like them, the customer may be more inclined to pay for more. This is also why you can often get free samples of perfumes and aftershaves in department stores and on the internet. Fagrances are hard to explain with words and are a very personal choice, so sampling them is the only way to see whether you like them.

Software companies use free trials in a similar way. They let you evaluate the effectiveness of their application, usually for a set number of days before you have to pay. Sage, Microsoft, Adobe, and CuriosityStream use this as a way to encourage their customers to test out their offering.

A Loss Leader

Sometimes giving one product away can help you sell another completely different one. This is a tactic used by Costco in several different areas of its business. It sells fuel at prices below its competitors, its famous hot dogs cost more to make and sell than the company gets paid by its customers, and many of its other products are sold at cost or tiny profit margins. These are all called loss leaders. They act to get customers into their stores, where they’re then likely to also stock up on toilet roll, bottled water, and dried foods by the pallet load.

All of these previous examples aren’t actually free as the customer still has to hand over some cash to get something in return. However, the company’s many free sample stalls located throughout its warehouses are completely free. They work in a similar way to many other free samples, with Costco hoping that customers will try a free sample of cheese and then buy a giant block of it.

But that’s not the only goal for the wholesaler, who actually uses the free samples as part of its branding and the customer experience. Consumers expect to be able to sample many different products when they visit Costco and this has become part of what attracts people through the door. It also helps to make customers feel more relaxed and make them more comfortable with buying more.

To Demonstrate Expertise

The old adage of “knowledge is power” is something that many business owners held dearly for centuries. Giving people your secrets was seen as a foolish move as it meant your customers could cut you out and do it themselves.

However, modern marketers have come to realize that it can actually benefit to share a limited amount of information to demonstrate that you’re an expert in your field. When done well, this kind of marketing can make customers come to you rather than you having to chase after them. That’s why Hubspot publishes hundreds of articles, ebooks, presentations, guides, and other tools for free, all aimed at helping business owners and marketing professionals to promote their own products and services.

By positioning themselves as an authoritative source of marketing advice, Hubspot increases the value of its paid-for products and services. Often, the company’s software makes it easier to perform the tasks and activities it describes in its content. Giving away knowledge can actually help sell more subscriptions.