Kickstarter Lesson #178: The Danger of Free

3 March 2016 | 38 Comments

2098235065_717d4c11de_b“Free” is a powerful word. It can lower barriers to entry–you’ve experienced the power of the words “free shipping,” “buy one get one free,” or “free upgrade with purchase.” Free gives us permission to say yes.

But it can also be quite damaging to a brand. As behavioral psychologist Dan Ariely talks about in this 5-minute video, free can have a huge impact on our buying behavior.

He uses the example of an experiment he ran involving chocolates. Ariely offered people a Lindt truffle for $0.14 or a Hershey’s kiss for $0.01. Most people chose the truffle–it’s just a few cents, and the perceived value of Lindt chocolate is much higher than Hershey’s.

But then he reduced the price of each chocolate by 1 cent. Now the Lindt truffle was $0.13 and the Hershey’s kiss was free. The vast majority of people now chose the free candy. The free price completely disrupts the value of the better product. It also assigns a value of $0 to the kiss…even though it certainly doesn’t cost $0 to make a Hershey’s kiss.

This happens all the time. In fact, it’s happening right now as you read this post. I’m guessing most of you would say that this blog entry doesn’t have 0 value–otherwise you wouldn’t be reading it. Let’s say you think it’s worth $0.02.

Imagine if you checked my website in a few days and saw a new entry, but this time, there was a paygate of $0.02 for you to read it. You’d probably close the tab and watch a free kitten video instead. Not only would you have to deal with an annoying microtransaction, but I’m also now charging you for something you’re accustomed to get for free.

When “free” becomes the norm for a product or service, it’s really hard to convince people it’s worth paying for. In fact, I would say that if free even becomes a possibility, it greatly decreases a person’s willingness to pay for it.

***

I’ll give you a very recent example. Pay attention to how you feel as you read this.

A few weeks ago, I announced in a Scythe project update that Tabletop Simulator (TTS) would be releasing a digital version of Scythe on their platform. As a generous gift to my backers, TTS offered them free Scythe keys.

I didn’t want to send out 17,000 individual e-mails (many of which would be to people who don’t care), so linked to a form on that update where people could sign up for the free key. When Scythe went live on TTS a few days ago, I closed the form.

A few things happened along the way:

  1. Ethics: I’m 100% sure that someone shared the link to the form on reddit, opening it to many non-backers. In this case, the free nature of the key created unethical behavior.
  2. Expectations: The folks at TTS and I got numerous e-mails from backers who found out about the keys after the form was closed. Basically, either they don’t subscribe to our project updates or they don’t read them. It’s the equivalent of me trying to use an expired coupon at Hardees–it’s too late. I had my chance and I missed it. Even though Scythe only costs a few dollars on TTS, the people who contacted us acted as if they no longer had any way to get the digital game. Because it was once free to other people, the freeness completely reframed what these people were willing to pay for it.
  3. Anger: This is an outlier, but one backer wrote to me to say that because he missed out on the chance to get a free key, the experience left him with such a distaste for Scythe that he wanted to cancel his pledge (which I promptly did). This backer paid $99 for a product that currently sells for $148+, and because he didn’t read a project update that would save him $6, he cancelled his entire pledge. Do you now see how free can twist at the core of logic and human nature?

I think I made a big mistake in accepting Tabletop Simulator’s offer of free keys for backers. I should have known better, and it seemed like a nice thing to do for backers, but I don’t think it’s worth the repercussions. It would have been much better if I had instead asked TTS on behalf of my backers to offer Scythe for an opening-weekend discount.

***

What does all of this mean for crowdfunders? Be aware of the danger of free. Be aware of this before, during, and after your campaign. There is no such thing as free lunch stretch goals. Everything has a cost, whether it’s financial or psychological.

With only very rare exceptions, I don’t give away my games for free in raffles and giveaways. I don’t want to ever condition people into thinking that my games or my time are free. It’s not worth the temporary burst of engagement if I’m permanently change people’s perception and buying behavior.

The next time you think about offering something of value for free, consider this: Do you want to be seen as the Lindt or the Hershey’s of your brand?

Addendum: I think there are some instances where free isn’t bad. For example, here I talk about the criteria I use to determine to which reviewers I send free review copies of games. Also, sometimes gifts are very meaningful–like, Will at Meepillows sent me a few meeple-shaped pillows, and I really appreciate that.

Also read: The ROI on a For-Profit Business to Support Charities

38 Comments on “Kickstarter Lesson #178: The Danger of Free

  1. Hey Jamey,

    Another great read. Definitely something to think about. Do you have a suggestion on something that could be used to provide similar interest but doesn’t have the same downside?

    Raymond

  2. Jamey, this is one of your best and most engaging entries. Not a comment on the others, but a compliment to this one. Well done.
    Great points too. At GenCon SoCal there was a man giving away free copies of his new super big hardback RPG core book he just published (to gain traction, etc), everyone I spoke to about it said “That guy is crazy. I’d never give my game away for free, plus people are probably not going to even play it now.” – I’ve had that gamebook for 5 years …I’ve never played it.
    Free belongs on intangibles that don’t exist once they’ve occurred. …like shipping. And even then you can still risk buying behavior change.

  3. I agree with JohnWrot! That this is an awesome article, and one of the many reasons I’m glad I subscribe to the updates.

    I work at a martial arts school where people pay for classes by the month, depending on how many times per week they attend. We occasionally offer a “1 Week Free Trial” to new students. A surprising number of people have tried to turn this into “1 Free Week’s Worth of Trials” meaning 4 free classes but spread out over a whole month. People definitely have trouble getting over “missing” a part of something free which they feel entitled to.

  4. I find this topic very interesting as a developer of free software. I’d like to think that the public perception of our work isn’t that it’s any lesser than paid products, but it is very ideologically different from paid software.

    I do think there may be a perception issue though in this particular case. It sounds like an issue of framing. If I was a backer who missed out on a key, I’d be very upset because it’s implied that the free key was a gift to all backers. That doesn’t imply a time frame. Whereas, “A free key to people who go to this link, usable for one weekend only.” is quite different.

    It sounds like a communication issue to me, not an issue of value perception. And if I were a backer, I’d expect a company to honor what they communicated, even if that isn’t what they intended to communicate.

  5. Great point Jamey. Free is indeed a dangerous word. I think a lot of gamers have gotten too used to the concept of “Free” Stretch Goals on Kickstarter, in fact. I often wonder how some game designers can afford to put out games when they’re clearly making nothing from them. It looks impressive to have $300,000 raised, but when they’re then making 10 books out of it, and paying for all that art, it becomes a totally different proposition.
    As you’ve mentioned, other Kickstarter projects don’t have this Stretch Goal phenomenon. They just have a great product that people can help to make a reality.
    Actually, it’s hard enough just making the product in the first place, let alone ten of them and loads of nick-nacks.

  6. I agree with everyone else that this is one of your best articles. I enjoy the Anger outlier story since I think that happens to everyone who runs a bunch of kickstarters.

  7. Thanks Jamey, brings into question the whole value of ‘free’. I once read a very good book (ages ago) called Priceless by William Poundstone, all about what the ‘perception’ of fair value really is and how we humans can be so manipulated or conditioned by external, often unrelated factors. A really interesting read for anyone that sells something with a price tag! On a side note and more CF related, what about the supposed ‘free’ shipping? Yes we all like not having to calculate the extra shipping on top of an item we want to purchase, but does that mean the supplier will never be able to charge a fair shipping fee into the future?
    What does everyone else think?

  8. This is one of those oddly well timed posts. You see I am right now starting the fulfillment process of my kickstarter, writing poems based on my backers poem topics. But some of the topics inspired more than one poem. I had only promised my backers 1 poem and some of the extra poems are not as good as the main ones. But I was thinking of sending them as “bonus poems”, after all its a nice thing to do for my backers. However your post is causing me to rethink this. I don’t want to end up reducing the value of my poem’s price or quality. And I’m positive that the poems I will be sending will be worth what they paid. Perhaps I’ll write them a thank you note for the inspiration

  9. Thank you all for your comments! I really appreciate you joining the conversation.

    Raymond, you asked, “Do you have a suggestion on something that could be used to provide similar interest but doesn’t have the same downside?” –Compared to a giveaway or raffle? In general, I think building relationships is much more important than one-time incentives. Or for conventions I do strongly believe in play-and-win games. There is a free element to it, but it comes at the “cost” of the people actually playing the game. Getting people to actually learn and play any game for the first time is a huge barrier to entry, so I think that outweighs the freeness of a play-and-win game.

    John, thanks for sharing that example about the free RPG book. After I read that comment, I actually added a little note about gifts. That’s a little different than what you’re describing, but just wanted to note that sometimes gifts–while free–can be very meaningful.

    Caitlin: That’s a great example of how our ethics can get a little twisted when “free” is an option. I’m sure we’ve all done something like that–I sure have. I think there’s a careful balance between lowering that barrier to entry vs. creating a system that promotes unethical behavior.

    Dyanne: That’s a fair point about communication. I went back and read the post, and it’s true that I wasn’t as clear as I should have been. I think the really interesting here is that it’s not like the gift was part of what backers paid for. It came months after the campaign was over, so it was a nice perk on top of what they were already expecting to get. So, logically, if they miss out on the free promotion, they haven’t lost anything–they can still spend a few dollars and get the digital game. But they FELT like they had lost something, resulting in some interesting interactions.

    Oliver: Indeed, I think more and more creators (myself included) are starting to see that, and I think we’ll see creators pull back a bit on stretch goals.

  10. Julie: I’ve heard great things about that book, and I’m glad you mentioned it. I need to finally read it. As for free shipping, that’s a great example of a precedent that has been set, and I think it will be really difficult to change it at this point. I’ve seen some creators charge a few dollars for shipping without negative consequences, so I think we’re moving in that direction, but I think most backers in the US would balk at having to pay a $10-$15 shipping fee.

    Zack: That’s an interesting point. So, this is a little different, but I remember getting one of the first projects I ever backed on Kickstarter, Quinn’s Popcorn. I remember it because someone had signed one of the boxes with a quick “thank you.” it was amazing to me that someone took the time to do that, even though it was a small gesture. I consider it outside of the realm of $ value, as it was just a nice personal touch. I think nice personal touches are great.

  11. I am reminded of a gaming convention here in California; Pacificon. While I personally have had a relationship with that convention that goes back decades, I had recently started taking my wife, and we had a reasonable time there several years running. A few years ago we opted to “pre-reg” at the con, something I normally did not do. Why pay in advance for a convention that might not even happen the following year (this convention disappeared for years).

    Well, most of a year passes. Convention registration cost continues to increase, and suddenly, a few weeks before the con, they offer a deal. Buy a registration in the next week, get it at the pre-reg price, AND get a free t-shirt.

    Well, I “am” paying attention to their communication, so I immediately ask why those of us who really “did” pre-reg are not getting t-shirts…and no response. At the convention itself, while picking up badges, I ask what the story is. Well apparently I can still buy a t-shirt (at the standard price), but they only allocated free shirts for the people who responded to the special offer…..about 10 months after I forked over my pre-reg money.

    This really pissed me off. It’s stupid, but the lack of respect it showed for people who actually tried to support them was just appalling. If they had simply not made that offer, my wife and I would have had a completely average time (the convention still had other issues). But as it stood, we felt we had our early support was disrespected, we felt that the staff was unresponsive, and we were quite alienated as customers.

    If they had NOT made that special offer I’m sure we would have felt that our visit was reasonable. But to have it made, and not extended to us in this case, made us unhappy. Every following defect at the convention was magnified. I have not pre-registered at that convention since, and actually we have never bought a membership at all. We often go and check it out, but now we need an actual reason to risk our money, and not a promise. So far we look at the events that are listed, and without seeing a huge list of things we are interested in, we leave. In the past, having just a few things was good enough…particularly since we had already bought our memberships. But no more.

  12. It’s a really interesting discussion in which you touch on ethics Jamey.

    I’m honestly curious about your decision to support TTS, a product that only gained popularity due to its allowance of pirated boardgames, including your own. A product that essentially placed the value of many virtual boardgames at $0.00 without even asking the designers or publishers of the games.

    the creators of said product used to spread on social media notices of popular games when they were ported by users, and even now they do not feel like piracy of boardgames is a problem (they said so themselves in a recent AMA).

  13. Geez, Jamey, if you wanted a patreon donation you could have just asked for one! ; )

    Just kidding. However, I have seen (heard?) podcasts rise-and-fade once they started even asking for donations, let alone adding a paywall. Going in free for what you ultimately want to be charging for seems to be incredibly difficult to pull off.

    I just successfully funded a kickstarter and the whole time I had people asking ‘Hey, can’t you give us this physical book some people are pledging for as free PDF for all backers? Wouldn’t that be a nice thing to do for us?’ Having read so many of your posts I was able to answer these potentially dangerous requests diplomatically.

  14. Matt: Thanks for sharing your example of the negative impact that something free had on you. I really like your observation about how if the convention simply hadn’t offered the free shirt, your impression of them would be much more positive.

    Bane: That hasn’t been my experience with TTS. I have encountered pirated games on there on the past (Euphoria and Scythe), and when I asked TTS to remove them, they did. I’m more disappointed that the people who made those versions didn’t simply reach out to ask me.

    JiaoshouX: Oh man, I applaud you for handling that situation diplomatically. That’s a tough position to be put in. Would you mind sharing how you responded when backers asked that of you?

  15. Great read and you make some really interesting points. I’ll admit it. I never saw the info about the free Scythe content. Mostly because I skim updates to see if it’s shipping, if not, I delete it. :)

    This article also made me think about free shipping and how we are accustomed to seeing that with kickstaters. I, like most people, hate paying for shipping. I’d rather pay $37 for a game, rather than $30 +$7 shipping. Is it logical? No. But we hate paying for shipping so much that if it’s bundled into the price, I think we can trick ourselves into seeing the game at a higher value, rather then wasting money on shipping. So in this case, free can actually make things better.

    Not exactly on the topic at hand, just what popped into my head.

  16. Tony: Thanks for your comment. I think free shipping is a great example of the conditioning I mentioned in the post. We’ve been conditioned (mostly by Amazon, but other companies too) to not want to pay for shipping. If that conditioning had never happened, I don’t think it would be a thing on Kickstarter at all. As a result, people think they paid $59 for a copy of Scythe on Kickstarter, while really they paid $44 for it (an insane price, considering the $80 MSRP) and $15 shipping.

    I don’t think this is an example of free making things better. :)

  17. Preach!

    I’d like to also note a major cascading effect that *free* has on the product. In the case of a board game, for example, it also devalues the exclusive artwork created by the illustrators, the design from the designers, the copywriting from the content team, all of which could be the best of their respective careers.

    I know from experience how it feels to put the work in to perform high-caliber work, only to have the client give it away on a whim or a glance instead of bolstering all of the value that’s only visible after a deeper look.

    People will always pay more for more. And I think that creators should always consider working harder than expected so that they can exceed those expectations, still be generous with the work, but also enjoy the bounty that comes with a job well done.

  18. Marc: That’s a great point about the cascading effect. I recently saw a post on BGG where someone was looking at games purely for the standpoint of “among of cardboard,” which I think is a very limiting way to look at it. Sure, the amount of stuff in the box matters, but so do all the other things that go into making a game, as well as the experience you get from playing it.

  19. It seems improper to remove the shipping cost and compare $44 to $80 for Scythe – if I buy a game from my FLGS at MSRP or thereabouts I won’t be paying shipping. From the customer point of view it’s not relevant how it is divided, it’s just $59 and $80 – that $80 included the shipping costs one way or another. Of course shipping is such a distasteful thing to have to pay for (being ephemeral), so hiding it lets us feel like more of the money is going to the parts that we like. Bring on the mass teleporters!

    Digital games (outside of cardboard ports) have this too. There’s a lot of very deep discounting and bundling, some of which is very predictable, so it’s very rare that I buy something at full or near-full price anymore – usually if it’s a company that I have a lot of confidence in from previous releases, like Arcen Games. Part of this is of course already having many good games, so I don’t feel the hurry – some people will get more value of playing new hot things quickly. Anecdotal evidence is on both sides there – I’ve heard small game companies say that they make most of their money during big sales, as well.

  20. Rahul: So you don’t see a difference between paying $44 for a game + $15 shipping and paying $59 for a game (that’s the comparison I made)? The cost is the same, but from my experience, the perception is much different, especially since many people buy games online (where there’s a variety of options for shipping–some stores charge shipping, others give you “free” shipping if you order a certain quantity of games, etc).

  21. Jamey: I agree, there is definitely a difference in the perception: free shipping makes it look like the game companies are getting more of the money so I feel better, even when I know that’s not the case. I took issue with “people think they paid $59 … really they paid $44 for it (an insane price, considering the $80 MSRP)”. They really did pay $59. A comparison to online prices would be fair as well, then you can factor out the shipping: $44 + $15 vs say $55-$60 + $6-$10, with various alternate options to pay for shipping as you mentioned.

    And for the record Stonemaier is a company that I have “confidence in from previous releases”!

  22. Ah, I see. The problem is, you’re misquoting me. The full quote is: really they paid $44 for it (an insane price, considering the $80 MSRP) and $15 shipping.” The sentence does not end after the parentheses.

  23. I guess we have to agree to disagree on that part, I still think it’s apples and salt fish. Thanks for the replies!

  24. In retrospect, you should have had TTS generate the required number of 1-per-use keys and sent them out in individual emails. That way you and TTS would have been giving the backers something of value that they could use or gift to someone else, and you avoid the reddit problem — in fact, gifting becomes a positive benefit to TTS.

    Sure, sending out 17,000 emails is a bit of a pain, but thats what computers are for. Or you could have put up a webform connected to a google sheet/app that let them type in their email address and get their key.

    Great cautionary tale, though…

  25. Robert: Yeah, that’s actually where the conversation started. Neither I nor TTS had the capability to send 17,000 individual e-mails to people with individual keys. Do you know of an e-mail platform that will allow you to do that? I like your second idea as well–which platform would you recommend for that?

  26. Jamey: not to toot my own horn, but my backersupport tool could have done it (and would even rate-limit the emails if your current mailserver has capacity limits).

    However, the other option would have been a google app. It’s fairly trivial (maybe a couple of hours work for someone with experience with google apps) to build a simple webapp on top of a google sheet. The google sheet would have columns with email address / key pairs (or perhaps hashed versions of the email address / key pairs), and the app on top of it would let people enter an email address, then it would check to see if there is a match in the sheet and if so, display the relevant key.

    Google apps are great for this kind of thing (and the price is right — free!). I’ve written apps that do really crazy stuff, like implement a STV voting app.

  27. You wrote “I think I made a big mistake in accepting Tabletop Simulator’s offer of free keys for backers,” but earlier you also say “I didn’t want to send out 17,000 individual e-mails.” If your gut says that there’s a “right” way to do something and you decide on a compromise solution instead, you’ve got to be willing to accept any unintended consequences of your compromise. That doesn’t mean your initial “free” idea was terrible. And I’m also not saying the email solution would have solved everything – there certainly would have been more effort required to set up a free offer that would not be subject to abuse, anger, etc – but I think the question is more one of whether that effort was worth it, and you decided that it was not. Perfectly acceptable. But I think you’re throwing too much blame at “free” and not enough blame at compromise solutions (not intended as a criticism).

  28. Keith: Thanks for your comment. I see what you’re saying. If I had found a way to send out 17,000 e-mails with individual codes, I may have avoided some of what I experienced regarding the free nature of those codes. I think all three problems still would have occurred, but hopefully on a lesser level.

  29. I can’t believe someone cancelled their pledge over something so trivial. You’re right, when it comes to money it’s all about emotions, not logic.

  30. Great article. And I agree that free equates to having no value (ie, free websites created in the past! *face palm*). =D

    But I also find giveaways to be fun and the small amount I give away is nothing compared to what I’d give away in a normal distribution model.

    My games won’t ever make me wealthy since I’m so hands-on with them but giving some away goes beyond making a buck and adds joy to my life (we’ve also donated 100s of games over the last year).

    I’m okay with being Hershey, they’re over a $7 billion a year company. =)

  31. This is super insightful. I had wondered about how offering a free game in a pre-launch giveaway would affect their willingness to participate in backing my KS campaign. Would potential backers decide not to pledge if they preferred to wait and see if they won the free copy? I ended up deciding to stipulate that the winner would not be announced until after the campaign ended. Even still, I gotta wonder…

    1. Ben: If I were to offer a free game in a pre-launch giveaway, I would definitely announce the winner before the campaign so you don’t have people holding out in the hopes of winning it. You want as many people as possible to pledge early in the campaign.

      Though, for the reasons listed in this post, I personally wouldn’t do a free pre-launch giveaway in the first place. :)

  32. Free is such a weird thing and can also go the other way. A lot depends on the consumer’s trust of the person “selling” and also their ability to accurately perceive the value.

    An example I saw was, if I offered you laser eye surgery for $80 you’d feel you were gearing a good deal. If I offered you laser eye surgery for free, you’d question if I was really a doctor!

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