Free ≠ Cheap: Overcoming the Psychology that Says Expensive = Quality

Posted by on Apr 11, 2014 in Insight, Pontifications, Software

It’s reasonable to consider something of lower quality when it comes to us at a bargain. Discount and free items naturally make us feel the items themselves are of sub-par quality. Terms like, “you get what you pay for” and stop being “penny wise and pound foolish” can contribute to make our freemium-based digital signage offering appear less than its stellar self. But, before I come railing to its defense, I want to get something very clear: just because something is free, doesn’t mean the product or service is inferior.

The Psychology of Cost

I have a good friend who is an extremely successful oral surgeon. With his practice booming, he felt he was not giving the time to his family that he ought, so he set out on a strategy that he hoped would decrease his quantity demanded–he simply raised his costs. What happened next, was beyond what he expected. His demand skyrocketed. People knew he was very good at providing the services he provided, but he believes the reason his demand jumped was simply due to the increased perception in quality that simply raising his prices had on the psychology of his patients.

That said, be not afraid, we’re not intent on raising our prices at all. However, doing so would be an interesting experiment. In our case, it would ostracize hundreds of loyal clients.

We still provide webinars on a weekly basis with representatives from some of the world’s best known brands on our calls. A frequent question we regularly receive is,

What’s the catch? With all of these advanced features and capabilities, there has to be a catch. Nothing is free.

No one is a believer until they try and you’re often damned if you do and damned if you don’t. I love what Amazon founder Jeff Bezos said during his 60 Minutes Interview. When asked if being cutthroat on pricing was unfair or unscrupulous to other business owners and their margins, Bezos said it perfectly:

Amazon didn’t happen to these companies, the future happened to these companies….Amazon will be disrupted one day.

Fortunately, there are some very well made products whose price point is now available to the commoner. Mobile phones take some of the most powerful technology and place it in the hands of nearly everyone on the planet. How much was the OS on most of those devices? Oh yes, it was free.

mediaHYBRID: An Example of Cost Effective Scale 

Our mediaHYBRID solution: it’s neither free, nor cheap, but offers some of the best digital signage has to offer on the market today–hands down. Combining our two business models (cloud and self-hosted), the mediaHYBRID provides the flexibility and scale of the cloud with the security and control of the self-hosted model. And, since we use AWS, you know you’re getting top-notch performance. *[end shameless plug]*

The best thing to do to avoid being on the losing end is to predict the curve and race to the finish line. In other words, the future is now. That’s how we feel about our business model. It’s here to stay.

Enter your details below to subscribe to our blog.
We respect your privacy