The home economist

Marketing by free association

Priscilla Gutierrez, 25, undergoes a pelleve skin treatment, used to keep the skin healthy and young-looking, at the Mount Sinai Medical Center in Miami Beach, Fla. She said she does it as a preventative treatment.
Priscilla Gutierrez, 25, undergoes a pelleve skin treatment, used to keep the skin healthy and young-looking, at the Mount Sinai Medical Center in Miami Beach, Fla. She said she does it as a preventative treatment.

Get it free

Free with purchase products could cost you in the long run, says research, because you’ll attach the value to the price you paid. Regardless, there are ways to score something for nothing.

• Hit the mall and ask managers about promotions.

• Sign up for rewards programs and be sure to get a schedule about monthly giveaways.

• Recruit friends for deals offered by companies who reward you for new customers.

• Search big brand websites, particular for food and cosmetics sold in supermarkets, and search for their promotions section.

• “Like” on Facebook your favorite peanut butter, granola bars or even sporting goods because free deals are often announced and over in minutes.

In Miami Beach, Greater Miami Skin and Laser Center patients who buy four high-priced and luxurious anti-aging treatments get the fifth for free. For Faxel therapies — which use thermal heat and lasers to replace damaged skin cells — you’ll pay $4,000 to get your $1,000 therapy free. And for Pelleve treatments — which deliver radio frequency deep into the skin — you’ll pay $2,000 to get a free one worth $500.

“We tried discounting but we didn’t get the same feedback,” says Ivan Pol, the center’s beauty director and cosmetic coordinator. “The patients don’t want to return to pay the non-discounted price. But they love getting them for free.”

New research suggests the center’s patients won’t only value the complimentary treatment but — because it comes alongside a luxurious, high priced purchase — will consider them to be equally precious. Much more so than if they’d paid a discounted price. The concept debunks the old premise about consumers failing to appreciate the free things in life. And one that has researchers warning us that “free” could be expensive in the long run — when next time around — we’re quick to pay the high fees our minds have already accepted as the cost.

“The notion of free is that if you don’t pay for something you don’t value it,” says Joydeep Srivastava, a professor of marketing and consumer psychology at University of Maryland. “But really you could value it so highly, you’ll spend more when it comes time to actually pay.”

Srivastava studied the effect by offering subjects products free with purchases. In one experiment, he created four groups of jewelry shoppers. Two groups had to spend $99, while half of those could get a silver pendant for free and half could buy it for $5. In another two groups, he raised the spending amount to $299 with still, half being offered the pendant for free and half for $5. Afterward, he asked all groups how much they would be willing to pay for the pendant and while the all the people given the $5 deal said they’d pay around $25, the people who got it free with purchase tied their perceived values to the purchase price; $37 for those spending $99 and $65 for those spending $299.

“If you buy a Mercedes and get a GPS for free you’re not going to expect the GPS to be low quality,” Srivastava says. “When you give something for free with purchase you’re setting people’s reference price to what they purchase. And their willingness to pay is more than if the product was offered at a low, discounted price.”

We’re also more likely to return to the brand that gave us freebies, says Thom Blishchok, chief retail strategist for Booz and Co. in San Francisco. That’s because each manufacturer has a perceived value in our minds, he says, and price discounting can erode that perception. But free items — in addition to offer sampling that has us coming back for more — add value to our purchase and therefore loyalty to the brand.

“Sampling is the biggest tactic stores use to increase value,” he says. “Americans are not changing how much money they spend. So brand manufacturers have to reshape how they buy.”

So how do you get free stuff that’s really free? It’s pretty easy with some willpower and a little work, says Kathy Spencer, editor of Start at the mall, walking into stores and asking managers about their free promotions, says Spencer, who does this as periodic research. At The North Face, she remembers getting from one employee a blank stare before noticing a wall poster offering customers an immediate $10 coupon sent to cell phones in exchange for a text. Spencer used it to buy socks for $9 that were essentially, yes indeed, free. At The Body Shop, she scheduled a free party for her friends, where they all got champagne, appetizers and goody bags stuffed with samples. At Godiva, she signed up for the rewards plan and now goes to collect her free truffle every month. At Aerie for American Eagle, the rewards program reaps her monthly treats such as tote bags and lingerie.

“You have to be brave,” she says. “But they usually have something. You just have to be willing to walk away from bigger deals because they always call you back.”

Another great way to get free stuff is to recruit referrals, says Spencer. Her utility company has a program that offers cash in exchange for new customers and Spencer says she can’t remember the last time she paid for a restaurant dinner thanks to Living Social, which gives her the deal free after she Facebooks her purchases, which inevitably entices three friends buy.

“I’ll only buy something that I know is a good deal — mosquito treatments, dinners, chimney cleaning,” she says. “But you only need three people to get it for free.”

This is one of an occasional series of columns by Miamian Brett Graff, a former U.S. government economist who writes about how economic forces are affecting real people.

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