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March 18, 2008

Free stuff

Ever wonder how Google manages to make lots and lots of money while not charging for searches?

It's all part of an economic philosophy that started more than 100 years ago with the marketing of disposable razor blades, according to this article on the economics of free in Wired magazine.

King Gillette got people to try his new product by giving away samples of razors to everyone --- new bank customers, for example. How did he make his fortune? By selling the blades themselves.

But these days, writer Curt Anderson says companies make money by giving away even more of their products. DVRs, cell phones, even directory assistance and air travel can all be yours for the low low price of nothing -- if you listen to some advertising, sign up for a two-year contract for digital cable or pay a fee to check a bag. Premium versions of software bankroll basic versions offered for free.

Others argue that price tags don't reflect true costs. 

 

In The Story of Stuff, Annie Leonard argues that the incredibly low price of a radio at a big box retailer doesn't include cost of environmental damage in the country where it was made. The documentary is long, but you could skip to the chapter on consumption to hear her take on both planned and perceived obsolescence.
Posted by Liz Kay at 11:31 AM | | Comments (1)
Categories: Cheap/Frugal, Marketing/Advertising, Shopping
        

Comments

I believe it's actually the other way around -- He gave away the razors for free, which were useless without the very necessary and high margin blades.

Posted by: Steve | March 18, 2008 1:01 PM

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