Free offers: what a zero price changes in a choice
A software trial, a banking service or free delivery can steer a choice without changing an organisation's needs. The management question is specific: how can we check that a free offer is selected for its usefulness rather than the particular appeal of a zero price?
What the literature establishes
Kristina Shampanier, Nina Mazar and Dan Ariely (2007, Marketing Science) show experimentally that reducing a price to zero can shift choices in ways that the price reduction alone cannot explain. In their experiments, the free option attracts more interest than a conventional comparison of costs and benefits would predict. The finding concerns experimental consumer choices, not strategic corporate purchasing.
A price that is more than an amount
Daniel Kahneman and Amos Tversky (1979, Econometrica) propose a model of risky decisions in which outcomes are evaluated relative to a reference point, with different sensitivity to gains and losses. This framework helps explain why a monetary change does not necessarily retain the same psychological meaning at different positions. It does not, however, establish the mechanism behind free offers: the zero-price study provides evidence for a positive affective response rather than an explanation based solely on avoiding a monetary loss.
The hasty conclusion
One might conclude that free offers should always be viewed with suspicion. That would confuse an influence on choice with evidence of a poor choice: a free trial can genuinely help an organisation test a useful service. The question is whether that advantage remains decisive once the requirements of adoption, use and exit are made explicit. (our executive and employee training programmes)
What the evidence does not establish
The cited experiments do not allow us to quantify the effect of free offers in a bank, a fashion business or a trading company. Nor do they establish that a collective purchasing procedure neutralises this effect. Adding training, migration or termination costs to the assessment improves the economic description of the offer, but does not, on its own, constitute a corrective method validated by these studies.
A practical check in Lugano
Within SHR's “Decision-making” programme, an exercise applicable in Lugano is to examine an offer with a free component: a banking software trial, delivery in fashion, a documentation service in trading or a management tool in an Italian-speaking family SME. Before comparing offers, the team defines its needs, intended period of use and exit criteria in Italian, then records the advertised price separately from the estimated total cost over that period, including its assumptions. The measure is the proportion of selected offers whose advantage remains explicit after adoption and exit costs are included; each assessment must allow the calculation and the reason for the choice to be checked. This check documents the economic justification without claiming, on its own, to measure a psychological bias. To go further: explore the Decision-making training in Lugano in the canton of Ticino, or browse our executive and employee training programmes in Switzerland.
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