QUIZ: Should You Offer a Freebie?

Scenario: Due to economic conditions, you're having trouble selling your flagship product. You're certain that when the economy improves, sales will recover. However, you can't drop the price, even temporarily, because you'd lose money on each sale. Luckily, you have another, not-as-strategic product that you can offer as a "two for one" freebie along with the flagship product. Please vote:

CLICK HERE FOR THE CORRECT ANSWER »
Scenario: Due to economic conditions, you're having trouble selling your flagship product. You're certain that when the economy improves, sales will recover. However, you can't drop the price, even temporarily, because you'd lose money on each sale. Luckily, you have another, not-as-strategic product that you can offer as a "two for one" freebie along with the flagship product. Please vote:

Two answers are correct.

The first correct answer is "Customers will no longer value the freebie product." By giving it away for free you're essentially saying it's not worth paying for. In the future, you'll find it difficult, if not impossible, to get money from anyone remembers the freebie offer.

The second (and surprising) correct answer is "Customers will no longer value the flagship product." According to scientific research published the Journal of Consumer Research and quoted in the New York Times, customers believe that something must be wrong with a product if you have to offer a "two for one" deal to get them to buy.

This is not to say that they'll think the flagship product is worthless, but they'll be much less willing to pay full price in the future, once they've seen it offered with the freebie.

The answer "Customers will consider the package a good value" is incorrect, because customers are more likely to think that the new price (i.e. the bundle) is simply the price that matches the actual value of BOTH products.

And the answer "Customers will consider the package a lousy value" isn't correct for exactly the same reason. Essentially, by offering the freebie, you've changed the customer perception of value to match the price of the package. Kapeesh?

READERS: Have you ever used a "two for one" offer to generate sales? Did your experience square with what the researchers found?