Should You Offer Your Product or Services for Free?

Should you give away free stuff to get customers? Does it work in the retail environment, in software sales, or even when selling your services?

The answer is as unique as your business.

When I was a 17-year-old junior at Arizona State University, I paid my tuition by working in what was then one of Phoenix's very first health clubs. I taught aerobics, sold healthclub memberships and spotted for some very nice looking male weight lifters.

But the club was seriously short on "regular" people - the members who are the backbone of any successful club.

One of the owners came up with the novel idea of placing colorful display boxes around town that said, "Try a Health Club Membership for 30 Days - FREE!" People would fill out a little form and slip it into the box. The other sales girl and i split the leads and called everyone. But of the people we got to show up in the club, very few converted to paying customers.

Undaunted, the clever owner tested his tactics. He switched the boxes to decree "Try a Health Club membership fo 30 days - Just $10!"

Fewer people actually showed up when he did that, but of those who did pay the $10, a much higher percentage bought the annual membership.

Lesson learned in this experience and many times since, in all my businesses and in many run by my friends: People don't value what they get for free.

On the flip side, there's the principle of "Givers Gain." Ben Franklin called it "Doing Well by Doing Good." How many times in your life have you tried something, liked it, and bought it? Exactly. Lots of times. Food samples, free trials, generous return policies, etc.

Many information-based businesses give away a little of their highest quality content to help the prospects trust them and appreciate the quality of their information. My sixth and current company Keller Media, Inc. gives away lots of free webinars to help new and future authors, speakers and small business owners realize that what we're offering is worth their time and investment.

The answer for your business is the real lesson embedded in the wisdom shown by the health club owner all those years ago: Testing. When free didn't work, he tried $10. One marketing theory is that people who pay a little in the beginninng will pay more later (assuming they like it). And people who pay nothing will never pay anything.

For one month, offer a sample to your prospects. During the next month, try your own customized version of the $10 approach - charge a little bit for something - even if it just shipping and handling charges. Pay close attention to what happens and you'll have your first answer. Three months later, try swapping out the free or cheap item - watch to see if that changes the inflow of customers.

One of the most surprising things I have learned about marketing and sales in my whole life is this: the more keenly you pay attention to your customers' behaviors, the more clarity you will have on how to serve them best and thus make the greatest profits.