Which is Better? A Free Product or a Discounted One?

Home Improvement CouponsValue is perception. 

If you spend $100 on a bottle of wine, you expect it to taste better than a $5 bottle. Right? 

And if I offer you the same expensive bottle for ten dollars… there’s a good chance you won’t consider it to have as much value and, therefore, probably will not enjoy the taste as much. But, if you agree to buy a case of wine and give you the $100 bottle for free… you’ll see just as much value in it and enjoy it as though you paid full price.

This is according to a new study in the Journal of Consumer Research

What does this mean for your home improvement business? 

Damaging Discounts Hurt Home Improvement BusinessesMany home pros offer incentives to get people to buy their services and products they install. While the study focused on consumer goods and not home improvement, your company could still be affected. 

Homeowners usually don’t know what’s involved in your costs – materials, products, markup, labor – and many may feel they’re over paying. Your job is to sell them on the value of your services. 

According to the study: 

“Promotions with low discounted prices devalue products more than free offers. In fact, free offers may not devalue products at all when they are paired with an expensive purchase, as consumers will use the price of the focal product to estimate the value of the supplementary product,” the authors conclude. “If Mercedes-Benz promotes a car with a free GPS system, we expect the GPS to be high quality,” the authors explain

So, here’s an example to show you how you’re affected. If you sell windows and use a coupon to get the homeowner to buy… say $500 off… you might be better off to offer your prospects a free window if they buy five. They will feel like the quality of the window is just as high because it’s free. 

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