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The Siren Song of FREE (The Zero Price Effect)

Raise your hand if you have ever attended a conference or trade show and grabbed a stress ball or keychain or some other promotional item that you knew you probably wouldn’t use? Of course you have. It was FREE!

Why do we do that? FREE has an irrational allure beyond logic and reason that makes us a little bit crazy and a little bit stupid.

Maybe it’s a perfectly good cabinet someone put out on junk pickup day that you snatched up. Or perhaps it’s three free months of a streaming music service’s premium option. Or a “buy one get one free” coupon. Whatever the item, the idea of “free” is intoxicating. When we have the opportunity to grab something for nothing – woohoo! It gives the brain a little shot of dopamine and feels awesome!

A few decades ago, banks gave you a free toaster if you opened an account. For kids, cereal boxes were ground-zero for FREE. If my mom brought home cereal that did not have a free prize inside, we had words.

More than just nothing

Psychologists study how we react to the concept of “free,” and to the human brain FREE is a bigger deal than just one dollar less than a dollar. It’s an invisible mind block called the “zero price effect” and it blinds us to the actual utility or value of the item, as well as the non-monetary costs involved.

It’s as if the chance to pay nothing for something temporarily drops our IQ several points!

Psychologist Dan Ariely has conducted several studies comparing consumer behavior when offered the same item at varying prices. When a price is dropped from $2 to $1, demand increases as you would guess. When dropped to $.50 demand increases more. But when the price is dropped to zero, demand goes through the roof! This happens even compared to a similar item priced at one cent.

Ariely says that that “individuals seem to act as if pricing a good as free not only decreases its cost, but also adds to its benefits.”

Want to learn more about improving your thinking and decision making?

A bigger issue

So the concept of free makes us irrational. But so what? If it doesn’t cost us anything, why is it an issue? In most cases there are other costs involved, but FREE causes us to ignore them.

Here are some of the hidden costs of FREE:


How much is your time worth? There is a ton of free online video content (YouTube, for example), but those videos take time to watch and if the value is limited, spending your time on them could be a bad deal for you. If you are getting a free steak dinner in exchange for having to spend the evening watching a boring sales pitch for timeshares, it may not be a good deal.

What about the time it takes to acquire the free item? Is standing in line for hours a good return on your investment? Is spending two hours watching a bad movie for free better than paying $10 to watch a good one? How far do you have to drive to pick up your free thing?

Personal bandwidth

We are now in the "attention economy." The longer your eyeballs and attention are fixed on a message, the more valuable you are to the seller. Not only are you giving up your time, but your focus as well, which should be more valuable to you than it is to the media purveyor.


Sometimes you are actually paying real money for the so-called “free” thing. If you can only obtain a free item by buying something else then it’s not free.

If I were in charge of consumer protection, I would demand that businesses stop using the term “Buy one get one free” or “X% more free” because the bonus is not in fact free – the cost is hidden in the price you do pay.

Opportunity costs

All of the time, energy, attention, and hidden monetary costs we spend irrationally on “Free” stuff could be better spent on something else that gives us more utility for what we are spending. What are you giving up?


If the free good is a physical thing, it takes up space even if it is small. You now have it somewhere in your possession. If you don’t use the item, it not only wastes space but adds to your overall clutter. Clutter contributes to stress, drains energy and wastes time as well.

Truly free

So be cautious of FREE and consider the potential underlying and hidden costs you will incur to get it.

But do keep this in mind as well: sometimes we are offered something for free and it really is free. A helping hand. A gift from a friend or loved one. A smile on the street. A listening ear when we need it.

Cherish the generosity and thoughtfulness of others who expect nothing in return.

Think well and be well!

- Steve Haffner


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