Organizations often fall into a price trap. To increase adoption, encourage trials or demonstrate good will, they offer their products or services for free. But research in consumer psychology and behavioral economics shows that “free” is delivered with high and hidden costs. Once customers internalize “free” as a reference price, it becomes difficult – sometimes impossible – to bill later. Worse, free offers are frequently under-valued, overused or mistreated. They create expectations that are difficult to relax and threaten long -term sustainability.
