Free vs. Fee

Sunil Sharma - July 11, 2002

Many promotional programs that marketers traditionally employ to lure customers into their businesses include offers of goodies and services that are either discounted heavily or free. Some of these programs are designed to win over customers by letting them test products and services in the hope that once customers test those products, they will like them enough to pay for them later. Other programs are designed to bring customers to businesses and then sell them other non-discounted products and services. The strategy is to spoil customers with freebies and then exploit their dependence (or sunk investment) on your products or services by charging for them later.

Freebies Can Get You Customers and Traffic
This freebie strategy has worked for a long time for the off-line businesses. The e-businesses took this to another level. They have used many ingenuous "freebie" strategies to lure customers. And these strategies worked big time, too.

Freebies--whether physical or informational--were instrumental in getting a number of customers to an e-business website. The high site traffic made advertisements genuine revenue-generating vehicles. High traffic also positively influenced e-business' valuation. When the going was this easy and the valuations were so high, e-businesses were not only able to get away with these freebies, but they were also able to hide their other …

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