The Economics of Free
The Psychology of Zero
A price of zero is treated differently from a tiny positive price, and firms exploit this pull.
Free is emotionally powerful.
Zero price effect
People often choose a free option even if a slightly paid one offers more value.
Samples
Free samples encourage trial and create a sense of reciprocity.
Free delivery
Shoppers add items to reach a free delivery threshold, spending more overall.
Caution
Ask whether you’d want the item at a small price.
A delivery threshold
A shopper adds a book to reach free delivery and spends more than planned.
Assuming free choices are always rational
Zero price can bias decisions.
Key takeaways
- Zero price attracts strongly.
- Samples build trial.
- Thresholds raise spending.
- Ask if you'd pay a small price.
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