A common buzzword you may hear these days is freemium, and for good reason. This business model combines the best of both worlds—product access with no cost unless you wish to use some of the advanced features. This model developed out of necessity, but have you ever asked yourself why?
I know this may sound shocking, but it’s because no one places value on anything that is free!
Think about it. Look back at your past week: How many times did you take that free giveaway at a store? Or take someone up on a free trial offer? Hardly ever, I’m guessing, because if an item is priced as free, then it has no value to us. Even if it is priced at $1, we might take a second glance. Just look at how successful stores like the Dollar Store or 5 Below are. People want a bargain, but they are suspicious of anything free.
My friend once tried to get rid of a couch and put it by the road in front of his house with a sign that said “FREE.” The couch sat there untouched for hours. His dad had stopped by to drop something off and saw the couch was still sitting by the road, so he put a sign on it that said “$10.” Within 30 minutes, the couch was gone.
Never underestimate the importance of the right pricing strategy for your product. It is the difference between success and failure—even if it’s a used couch.