How to Give Away Freebies--and Not Bankrupt Your Business
BY Minda Zetlin
Giving away products and services may sound like a bad business strategy, but there are times when it's the smart thing to do.
Two guys giving out samples outside the Smoothie King.
No matter who you are or what your company does, you've been asked to give your product away for free. Charities, reviewers, bloggers, potential customers, and just about everyone else think they're entitled to a sample or a supply of whatever it is you sell, and they aren't shy about asking.
This is a dilemma we at the American Society of Journalists and Authors grapple with often, since no one gets asked to provide their products for free more often than a professional writer. Say yes all the time, and you're likely to go bankrupt. Say no all the time and you may be missing important opportunities to reach new customers. How do you determine when and whether to agree to a free product request?
Consider the following questions:
1. Will giving away this freebie threaten your profitability?
If you can't afford to give your product away and stay financially healthy, don't do it, not even in pursuit of lucrative new business. "We're going to be your best customer," may sound like an appealing promise, but unless that promise is backed up by some sort of contract, you should recognize it for the uncertain prospect that it is.
2. Will you get something valuable in return?
Barter, whether as part of a formal barter exchange or informally, is one of the best reasons to give a product away. What you get back might be products or services your company needs, or specific promotional consideration. Would you be willing to donate your bakery's goods to the local high school team's bake sale? Sure--in exchange for being officially named as a team sponsor and having table signs promoting your bakery prominently displayed. You're being asked to give something of value, so don't be afraid to request something valuable in return.
And do think outside the box. I just spent a few nights at the Roosevelt Hotel in New York City, site of the 2013 ASJA annual conference. The hotel normally charges for its WiFi, but gives it away for free to guests who download its mobile app onto their smartphones or tablets. The guests get something they want, and the hotel does too.
3. Will this meaningfully help raise your company's profile?
Promotional value can be a good reason to give your product away. This is distinct from the exchange of goods for promotion. A classic example might be sending your product to a blogger or reviewer. You likely won't get a promise of a good review, or even a review at all. But if giving the blogger the opportunity to try your product means there's the prospect of a review where there wouldn't have been one otherwise, it may be well worth it.
But make sure you do it the right way. First, make sure the reviewer in question really does reach a substantial audience of your potential customers. The reviewer or his or her organization should have statistics or other material to show that that's the case. Also, don't send your product willy-nilly into the wilderness; instead ask if the reviewer would be interested in receiving it, and don't waste freebies on those who don't respond. (If you're working with a public relations firm, follow their advice about this.)
4. Is it the right thing to do?
There are many cases where giving your procuct away for free can help someone in need, support a cause you believe in, or both. If that's the case, and you can answer no to question 1, then that's always a good enough reason to give it away, even if you don't get something of equal value in return.
But be selective. If you try to support every good cause, you really will go bankrupt, so choose those that truly align with your company's values.