The Risks of Offering “Free” Goods and Services

Organizations often fall into a pricing trap. To increase adoption, encourage trial, or demonstrate goodwill, they offer their products or services for free. But research in consumer psychology and behavioral economics shows that “free” comes with high, hidden costs. Once customers internalize “free” as the reference price, it becomes difficult—sometimes impossible—to charge later. Worse, free offerings are frequently undervalued, overused, or abused. They create expectations that are hard to unwind and threaten long-term sustainability.