Is free a dirty word

Written by Posted On Tuesday, 16 October 2018 08:26

The word “free” piques your curiosity and draws you in even if you don’t want to purchase the item. Free connotes in our minds no financial loss. You are getting something for nothing. The vast majority of us are sensitive to losing money - one way or another - known as loss aversion.

The neural wiring of our brain operates for physical survival, and not modern-world challenges such as financial decision-making. The brain operates on a “rule of thumb” system to making risky decisions. This type of shortcut decision-making is a way we try to make sense of complex financial issues. 

So, when you read or hear the word “free” it influences our mental shortcut.

Here’s why FREE is compelling:

  • Little to no risk
  • Easy mental shortcut—eliminates need to think
  • Nothing to lose
  • Nothing to spend

Have you ever been to a conference or seminar where they were giving away “freebies” like writing pads, pens, key chains, and other meaningless objects? When you returned home did you wonder what you will do with all these gimmicks? Did you use some of them or throw some out? Why are people so attracted to things that are free? Free is an emotional appeal. Free is only natural.

Feeling pleasure

Hidden deep within our brains (specifically, the temporal lobe—that’s as far as I go with anatomy) is an almond-shaped mass called the amygdala - trigging our emotions faster than we are conscious of. In other words, it eliminates the need to think.

There’s research underlying the amygdala as the location for fear of losing money. Since people are sensitive to the potential for loss and the risk of making a wrong decision, an option that is free implies no loss or risk to making a wrong decision.

This little structure is behind the involvement of our emotions (pleasure, anger, & fear) and motivations, especially related to survival. The human brain is wired for survival - it has yet to catch up to modern day living.

Loss aversion is the avoidance of making a choice which can lead to a loss even if the gains outweigh the loss. Typically, gains are not guaranteed. Once you have framed something as a loss it will affect your behaviour.

Free changes your behaviour

Dan Ariely, in his book Predictably Irrational, says

“…humans are intrinsically afraid of loss. The real allure of FREE! is tied to this fear.  There’s no visible possibility of loss when we choose a FREE! item (it’s free).” 

How companies get you with the free stick

Free gift

When you spend over a specific amount, a company will offer you a free gift or present. The classic example is on the retail side of business whereby companies entice customers’ with free gifts if they spend over a certain amount.

Fiona Baker, head of client relations for SimplePayday, uses this technique for her business customers:

“We have offices in the US and we do a lot of schmoozing with clients on the business side of things. Often we will send presents or gifts depending on the size or scope of business we are intending to do with them.”

Free Marketing

The marketing landscape for business is competitive. Using free strategically can bring in a stampede of customers ready and willing to buy.

Examples:

Buy one get one free. You could be spending more than intended, especially if what you were intending to buy was not part of the deal. Rather you bought an item of less quality because it was marketed as free.

Free shipping

Company X is offering this deal right now on orders over $25. They know their consumer market will easily purchase items over $25. By the way, customers will have to exceed $25 because no matter what they buy it will not equal $25.01.

Should you fear free?

The emotional touch of “free” can trigger a dampening of our ability to think analytically. We forget the downside that could accompany when something is “free”. We may perceive what is being offered as more valuable and end up spending more money than we intended.

Pay attention the next time you are offered something for free by a retailer. You don’t want to fall into the trap of buying something you do not want or need.

Rate this item
(0 votes)

Agent Resource

Limited time offer - 50% off - click here

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.