Zero-Price Effect & Marketing

First, in many circumstances, you can give away a free product or service on your motorcycle site and get more marketing value than the free product or service is worth. This is a basic overview of the zero-price effect.

In standard economic and marketing laws, your biker target audience will choose the option with the most benefit after a cost-benefit analysis. The effect is linear, meaning the change in the cost and benefit in your visitors’ evaluation of the value goes up or down in a straight line.

However, with free products, if visitors have a low cost of acquiring them, they will value the product more than it is worth. Subsequently, you will see an increase in the perceived value of your offering. 

Zero Price Effect Free Stuff in Red on Yellow Icon

When Zero-Price Works

Not always will you find that offering a free product will follow the zero-price effect phenomenon. And this happens when the cost of getting the free motorcycle product is high. Here’s an example of someone buying motorcycle boots that cost above $140. Let’s say they get a pair of cold-weather motorcycle socks that regularly cost $12, but they are free with the purchase of the boots.

Now, if this offer is available on your motorcycle site, it will positively impact sales. And this is because it doesn’t cost your audience anything extra. In this example, people will put an over-inflated value on the socks due to the zero-price effect. But, if riders can only get the socks by going to your brick-and-mortar motorcycle store, it won’t have a positive impact or will be much lower.

Next, the reason is that people will need to drive to your business’s location, wait around to buy the boots, and then go home. This costs them their time, which people highly value. Also, people don’t like to wait around in stores.

One common zero-price effect offer is free shipping. A marketing statistic related to it is that 49.3% of people stated that free shipping is the most important factor when shopping online (Oberlo.com). 

To keep the same net profit, you can raise the price of your product. For example, if you have a $100 product that usually ships for $8, you’d charge $108. Now, you have the zero-price effect. If the product price went to $108 with free shipping, people would choose the offering with free shipping rather than the product where you charge shipping separately.

Overview of the Zero-Price Dynamic

In summary, what’s important for your search engine agency to know is that people have difficulty resisting free. The demand for your motorcycle products or service is significantly higher if it includes a free product with low related costs. Besides that, free can help you avoid lowering the perceived quality of your products when lowering the price.

Finally, two related articles that might help you on our Marketing Academy are about how discounts hurt perceived value and how quality customer service increases sales.

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