Getting something for free - such as in a buy one, get one free promotion -- can make the freebie's perceived value drop. After all, if it's free, why pay for it when it's not part of the deal?
But a new paper to be published soon by the Journal of Consumer Research shows that such freebie deals also have another hidden cost -- the item that isn't the freebie also loses value in consumers' minds, according to a New York Times story.
Michael Kamins, a professor of marketing at Stony Brook University, who is one of the paper's authors, told the Times, "When you resume selling it individually, they say, 'Wasn't this that item that you had to sell something else with, to get me to buy it? It must be pretty bad.' "
In one study, Kamins auctioned off 100 pairs of coins on eBay -- an Indian penny from 1865 and a less valuable 1901 penny. He also sold some individual 1,865 pennies, in auctions visible to bidders on his bundled pennies.
When the bundles were advertised as "get a 1901 penny free," the prices of the solo older pennies suffered. When the bundle wasn't promoted as including the freebie, the individual pennies sold at a higher price.
Next time you try to sell something on eBay, don't throw in an extra item. Or at least don't if you plan on selling that extra item by itself sometime.
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