The Power of Free: Why We Love Free Stuff and How It Works

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Happy Saturday! I hope you’re having an awesome start to your weekend!

Today, I’ve been exploring the amazing world of pricing psychology, and I can’t wait to share some exciting insights with you.

Can you believe it’s already been six months since we started this newsletter together? I really appreciate your support—it means so much to me!

In this issue, we’re going to explore something called the Zero Price Effect. It’s a neat idea that could change how you think about marketing.

Back in 2013, Baskin Robbins gave away free ice cream in the UAE to celebrate Dubai being chosen for the World Expo 2020. The lines were crazy—people waited for hours, stretching out of malls and down the streets—all for a $3 scoop of ice cream!

So, what made everyone so eager to wait for a small, free treat? Psychologists call this reaction the zero price effect.

The zero price effect explains why we act a little irrationally when something is free. Normally, when prices drop, we want the item more. But when it drops all the way to zero, our desire jumps way higher than it logically should.

It’s like our decision-making process gets a little bit scrambled. Instead of carefully weighing the benefits and costs, we just jump at the chance to get something for nothing.

In other words: “Free things are super tempting!”

Why Free Feels Better

When we’re deciding whether to buy something, we usually consider the cost, how much we need or want it, and any effort it’ll take to get it. But when it’s free, all those careful calculations go out the window.

Suddenly, we just see the upsides and ignore anything that might hold us back.

Stories of the Zero Price Effect in Action:

1. Free Chocolate? Yes, Please!

Here’s an example from a famous experiment by researchers Shampanier, Mazar, and Ariely.

They set up a stall selling two types of chocolate:

Hershey’s Kisses, which are tasty but pretty basic, and Lindt truffles, which are a more expensive, high-quality luxury treat.

At first, they sold Lindt truffles for 15 cents each and Hershey’s Kisses for 1 cent. At these prices, 73% of customers picked the Lindt truffles, preferring the fancier chocolate even if it cost more.

But when they made Hershey’s free and dropped Lindt to 14 cents, people’s choices flipped!

Now, 69% chose the Hershey’s Kisses, while only 31% went for Lindt.

The price difference was still 14 cents, but making Hershey’s free made it way more attractive to people. They didn’t think through the “quality for the price” anymore; free was enough to tip the scales.

2. Free Breakfast at Hotels

Researchers also found that people are more likely to choose a hotel with free breakfast, even if it wouldn’t be their top choice otherwise.

In a study, travelers could choose between a pricier, well-known hotel and a cheaper, smaller hotel.

At first, they offered breakfast at both for a small extra fee, and only 8% chose breakfast at the cheaper hotel.

But when breakfast at the cheaper hotel became free, suddenly 46% picked it! The zero price effect made free breakfast so appealing that it outweighed the hotel choice itself.

We see the zero price effect all the time:

• People join Amazon Prime mainly for the free shipping.

• Studies show that UK shoppers prefer free shipping to eco-friendly options.

• Deals like “buy-one-get-one-free,” “free gift with purchase,” or “free shipping” can boost sales significantly because “free” feels like a bonus we can’t pass up.

Why the Zero Price Effect Works

The reason “free” is so powerful is that it makes our choices simpler.

Instead of comparing options and weighing the costs against the benefits, we feel we can just say “yes” without hesitation.

This is why people value free products more—they feel like a reward with no strings attached.

Using the Zero Price Effect in Marketing

1. Freemium: The Power of Free in Business

Imagine you sell a product and throw in a small free gift. This can make people want to buy more from you, which means you make more money. So, that little free gift is like an investment to get people to spend more.

For example, some brands don’t bundle products but instead offer a gift when a customer spends a certain amount.

The result? Customers often buy more to get that free gift, leading to bigger orders.

2. The Magic of Free Shipping

Free shipping is what every customer loves

When Amazon introduced free shipping on orders over €20 in Europe, people started adding more items to reach that threshold.

But in France, where Amazon only offered a discount on shipping instead of making it free, customers didn’t increase their purchases as much. The zero price effect helped Amazon drive sales up because free shipping felt like an easy win for the customer.

3. Zero Price Effect in Bundling Products & Services

The tourism industry uses free perks in bundles all the time.

Think about this: If you're choosing between a $760 hotel room with free water from the mini bar and a $750 room where you have to pay $10 for water bottles, most people would prefer the first option.

For marketers, the takeaway is simple: highlight any “free” perks you can offer, like free shipping, a free sample, or a gift.

Even if the product costs more overall, the “free” add-on can make it irresistible.

For example, if your product is $50 and shipping is $10, you could say it’s “$60 with free shipping” to make it more appealing.

Wrapping Up

So, there you have it—the magic behind the word free!

It might seem simple, but the zero price effect can completely change how people see your offer.

Free shipping, free samples, buy-one-get-one-free deals—they all trigger that “I’ve got to have this!” feeling that makes people act.

For marketers, this effect is pure gold. It’s that little nudge that makes them choose your product over the next, add more to their cart, and keep coming back.

If you made it to the end, here’s a freebie from me to you: a collection of Viral Hooks to use in your videos.

It’s my way of saying thank you for subscribing to and supporting The Beanstalk.

Happy creating, and may “free” keep working its magic for you!

📚 Related Highlights

• Check out this MIT research on zero as a special price: the true value of free products.

• The zero-price effect in freemium business models shows how a free mentality and price–quality inference can influence outcomes.

• Here are 12 simple ways to increase Average Order Value (AOV) in e-commerce

• 5 examples of SaaS product bundling

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