Say you're a start-up franchise looking to reach new audiences. How do you get those customers in the door to sample your service or products? Many franchises and businesses have decided to give something away for free. It seems like an obvious strategy, but new research shows that consumers are actually put off by the sight of free things.
I was reading about this in the Wall-Street Journal recently. A study published in the Proceedings of the National Academy of Sciences explores in depth that trend of 'paying what you want', which you'll encounter everywhere from art galleries to delis these days. It turns out that most often consumers opt to pay the normal cost of a good or service because they don't want other people to consider them cheap.
Restaurant chain Panera Bread has experimented with this concept with its Panera Cares restaurants, which allow customers to pay what they want for bread, salads and sandwiches via a donation box. They quickly found that customers didn't appreciate the option.
“People didn’t like the feeling of getting something for free,” a spokesperson for Panera told the WSJ.
While this evidence will be relevent especially to food franchises weighing up allowing customers the option to set their own prices, there are also lessons that all franchises can extrapolate. It seems that consumers have an issue with free things. There's something demeaned in the act of giving something away. It's something every franchise should consider.