If most people spotted a hundred dollar bill fluttering across the street, they’d cross the street to grab it, even if it meant dodging traffic to do so. But not many of us would dodge traffic if someone offered us $100 to do it. Why is that? The reward is the same, and so is the amount of risk involved. But the story that is told afterwards is completely different. In the first scenario, we can tell our friends that we hurried across the street for a “free” hundred dollars, and most of them wouldn’t blame us. In fact, they’d probably do the same thing under the circumstances. But if the story involves someone paying us $100 to dodge traffic, many of our listeners would warn us against risking our lives for $100, and a few would even think we were crazy.

In the first scenario, it’s easy enough to dismiss the work performed, while in the second there’s no way to deny it. And by focusing on the effort, the illusion of “free” money quickly disappears.

Consider the impact of the phrase “free shipping.” Years ago, the main complaint that consumers had regarding the option to purchase an item online was the cost of shipping. A frequent response to the topic would have been “Yes, it’s cheaper, but by the time you add shipping it’s about the same.” Of course, very few people actually bothered to do the math. After all, the only thing worse than not getting a discount is having to do math.

free.jpgOnline retailer Amazon.com recognized the power of “free shipping” years ago, and accidentally validated the theory when they first implemented the policy. Naturally, they saw a big spike in sales across most of the countries offering the deal, but they noticed very little difference in their French sales. A bit of investigation revealed that for unknown reasons, the shipping price for France was changed to $0.25 instead of nothing. Essentially, paying $0.25 for shipping was practically free anyway, but when Amazon corrected the error, French sales surged.

Any rational shopper would recognize that adding 25 cents to the cost of a $70 item would not cause them to abandon the purchase, but when it was an added cost, paying it was unconscionable.

Marketing experts have long been aware of the impact of certain words on a consumer’s behavior, and they’re not shy about using that knowledge to their competitive advantage. Kantar Media, one of the world leaders in marketing research, surveyed 2500 people to discover which deal they preferred in a list of attractive discounts. The bargains offered included better selection, faster shipping, in-store return options, more payment options, free returns, and free shipping. The “free shipping” option was the most popular by far, followed by “free returns.” It’s no coincidence that these 2 options were the only ones to contain the word “free.”

One of the reasons that consumers prefer “free” is that nobody likes math. As soon as we begin to demand that the customer perform any sort of computation mentally, they tend to lose interest. A $100 item at a “50% discount” will never be as attractive as the same item with a “$50 off” tag, simply because the math is easier in the second offer.

However, there is nothing mathematical about the word “free,” and it still promises a bargain, which we all want. In fact, this concept has evolved into a sort of advertising standard all on its own, known as the BOGO (buy one, get one) deal. There is even a chain of BOGO stores cashing in on the concept, but the same store would probably not do as well if they claimed to be a “Half-Price” chain. We have been programmed to respond to certain offers as if they were scams, and when we see “half off,” we tend to assume that the merchandise was marked up prior to the discount, which is something we don’t even consider in a BOGO sale.

In his book “Predictably Irrational,” economics professor Dan Ariely aligns the concept of “free” with our instinctive aversion to loss. Anything that is free does not carry a risk of loss, and removing that fear can be a powerful motivator. In the case of an expensive item that comes with a free gift, the aversion to loss on the free item is often strong enough to triumph over the risk of loss on the main, expensive item.

For businesses, however, the use of the word “free” isn’t entirely without potential costs. For example, few Mercedes-Benz owners would be impressed with a “free” upgrade to a higher class of car, or even a “free” tank of gas. That’s because Mercedes-Benz is a luxury car, and any offer of “free” tends to cheapen the brand in the consumer’s mind. They pay what they do because they can afford to, and they are rightfully proud of that fact. The implication that a customer might be motivated by any sort of freebie is nothing short of an insult to an affluent and discriminating consumer, who shouldn’t be influenced by gimmicks and tricks.

Marketers know how to motivate us because they’ve studied us. They know that most purchases are not initiated out of a need for something, but out of an emotional response to the stimulus they project. As consumers, we should be able to resist these tactics and instead make our purchases based on reasoning instead of emotional manipulation. So the next time you hear of a “free” offer, take a minute to consider your options, and don’t be tempted by the word itself.

IMAGE: By SpiderWeb-MarketingSystems (Own work). CC BY-SA 3.0 or GFDL , via Wikimedia Commons