Giving it away for free

My first jobs out of college was in politics. I was hired onto two campaigns for two candidates seeking statewide office: first for Lt. Governor and second for US Senate. As I was responsible for Silicon Valley fundraising I got a ton of experience asking people for money. Every week we’d open the donations envelopes and inevitably find a stack of donations for between .50 cents and $5. Unfortunately I didn’t really understand -- nor had I read Hardball -- why we were wasting time depositing such small donations as it usually cost more to deposit than the donation was worth. Fortunately I worked for a real professional Campaign Manager who taught me an interesting lesson about human behavior that I have never forgotten. Regardless of the amount of money you always graciously accept the donation. It took a lot of conscious thought and effort to write that check, put it into an envelope and, in many cases even put a stamp on the envelope. Whatever their reasons for writing a small check -- they could be on food stamps, living in a shelter or on the street -- they felt it important to make the donation. The most important outcome of the donation was it created a tangible and significant emotional attachment between the donator and donatee. The donator feels invested in the candidate and will see the candidate’s success as equal to their own success. They will tell their friends to vote and wear a button and go door-to-door for votes. In many cases their was a reverse correlation between the size of the donation and their fervor for the candidate.

There is an important lesson here for technology and other businesses: think twice before deciding to give something away for free. While there is value in a time limited or capability limited free product, if the customer doesn’t have to invest in the product their fervor and enthusiasm for the product will be very minimal at best. If however they are invested -- even just minimally -- they can become strong advocates and even salespeople.

I know that this isn’t always true but it is my hope that it will remain as a cautionary reminder to thing long and hard about making your product or service free. One truism remains: it’s a lot easier to make something free than it is to try and charge for it later!