If you want to sell more of your product, give some away for free

They say, “what goes around comes around,” and that’s true for one of the best revenue-generating strategies of all time.

It’s called: Try before you buy.

The technique comes in many shapes and sizes. It has given us the automotive test drive. It’s responsible for fitting rooms at clothing stores. And it’s the rationale behind Costco’s legendary array of free food samples, which are so tantalizing that I’ve heard of couples who make a date-night of nibbling from station to station.

The concept is simple: Remove the risk from a purchase decision. Let people have a taste of your product for free and then, if they like it and want more, ask them to pay for it.

It’s old-school. But it’s also the dominant revenue generation strategy on the internet. Without it, we wouldn’t have Dropbox or LinkedIn or Hulu or Spotify or Match or dozens of other internet companies.

This year, the online tax preparation service TurboTax used the technique nearly to the point of absurdity. In a series of TV commercials featuring lawyers, game show contestants, and a field goal kicker and his dad, the brand’s entire dialog compromised one word and one word only, “free.” That’s right. The entire dialog was free, free free free.

The ads’ creative approach certainly drove the point home, and it also drove millions of customers to the company’s website. Once there, it was easy to see that the whimsy of the advertising was backed up by a clever strategy for upgrading customers to paid services.

Sure, people with simple finances could file for free. But if you wanted to itemize your deductions, you needed the deluxe version for $59.99. If you’d sold stock or owned rental property, you needed the Premier version for $79.99. If you’re self-employed, you had to trade up to the $119.99 version. Want help from a live CPA? That’s another $80.

Offering a “free” sample got people in the door. But full-featured versions of the service drove revenues.

The approach clearly works and will be good for your business too.

Used properly, it’ll introduce your product to potential customers who don’t yet know your brand. It’ll educate existing customers about other products you offer. It’ll encourage repeat business. And free samples or trials are great at generating word of mouth recommendations and referrals.

But when you design your free offer, you need to strike a delicate balance. Give too little, and no one will sign up. Give too much, and no one will need to buy your product or upgrade to your full-featured service.

Make the difference clear between what’s free and what customers have to pay for. With Dropbox, for example, once you’re past 2 gigabytes, you need to either delete files or pay for more space. With LinkedIn, on the other hand, I’ve never truly understood how I’d benefit from their premium products.

Pay attention to your conversion rate from free to paid. A low rate means you’re not giving customers a good enough reason to buy or upgrade. A high rate means you’re not attracting enough people with your free samples.

But don’t let these analytics scare you. A simple approach can work just fine.

I order a bag of special charcoal every couple of months. Recently, I found a free sample of fire starter pellets included in the shipment. I didn’t know the company sold them, and I used to order a similar product from Amazon. But these worked great, and now I order them along with my charcoal. It’s $6.99 for a bag of wood shavings. Just imagine how profitable that free sample turned out to be.