We're developing an idea for a product that we can give to retailers at no cost by subsidizing the cost through advertising. Retailers don't pay much for it, but it is still an expense to them. The margin we'll make on advertising is much greater then the cost of the product to the retailers.
Should we give the retailers the products for free as a token of appreciation for letting us advertise through their store?
Or should we not leave money on the table and charge something?
And if we say free, how should we market that? The old thinking anything free is too good to be true, worries us.
I appreciate your help
While free may be tempting, I would argue for charging for your product for a few reasons, but I would list the top three as:
In the end though it all depends on your goals. Is it more important to have lots of customers (where you are earning peanuts from each) rather than a few (who you earn a fair amount from each)?
If you're selling to a business, I would say no free.
Initially you can be in "Beta" for an extended period of time to drive adoption (= "free"), but set expectations that you will charge. You could use your beta customers to validate your pricing model, once they realized the value of your product
I think there are a range of issues and it will come down to your offering, and your clients needs ...
Also, free is not free if someone is paying for it. If people can see where your getting your money from then they are just benefiting from it not being them.