Tag Archives: pricing

A tale of two Cakes, why you should give away your best stuff …for FREE?!

This was inspired by the excellent talk between Frank Kern and Eben Pagan, the latter of whom has a mantra of giving away your best stuff for free. It’s obviously worked out well… To the tune of $25 Million a year business.

“If you want to keep something precious, throw away the key” –Sting

It’s counter intuitive why giving the best for free can be the best thing for your business. Let’s delve in.

A Tale of 2 Cakes

Would you like to eat your cake first? I had a girlfriend who only ordered small dinner so we could splurge on dessert. I bet your customers are the same.

Here’s an example to compare.  Say we are walking by the bakery section in the store, and there are 2 parallel promotions, of 3 things: Cake, Whipped Cream and Milk, Each giving away 1 of them, with optional upsells for the others.

Keep in mind that what we sell things for have very little to do with the intrinsic costs.  So in this example,  a cake may not cost more than a glass of milk.   Especially in digitally delivered info products, the cost per copy almost doesn’t exist, digital milk costs the same as a digital cake to bake and consume.

1) Eat Cake First (aka Ramp Down Perceived Value)

  1. Fresh Baked Cake FREE  (worth $9)
  2. Whipped Cream = $7
  3. Glass of Milk   = $3


TOTAL $10 for us, user gets $9 in value for $0.

2) Eat Cake Last (aka Ramp Up Perceived Value)

  1. Glass of Milk  FREE  (worth $3)
  2. Whipped Cream = $7
  3. Fresh Baked Cake= $9


TOTAL $16 for us, user gets $3 in value for $0

Now let’s compare the two from both the seller and customer’s perspective, on the ideal case of the customer having all the upsells.

From a seller’s perspective (omitting costs)

  • Cake First: we net $10
  • Cake Last: we net $16<– $6 more is clear winner for seller right? NOPE

From a buyer’s perspective

  • Cake First: out $10, get $9 in value <– clear winner for buyer right? YEP
  • Cake Last: out $16, get $3 in value.

Cake First Wins? but How… WTF?

Don’t worry, it’s not clear on first glance.  Along with the world is not the center of the universe, Cake Last is ”The Intuitively Obvious but Incorrect Assumption” – a great quote from Jeff Hawkins in his TED Talk.

On paper first blush as the store owner, $16 vs. $10 would seem to make Cake Last the clear loser, right? We are losing a potential profit $6 dollars per sale. Nope.  In Reality, there are ways more people who want cake first than they want milk first… Let’s be conservative and say 2:1 people prefer cake first vs. milk first. Let’s be conservative and say 2:1 people prefer cake first vs milk first.   If we only sold one of each at that ratio, Cake first would net us $20 vs. $16!  AND the customer is happier. Cake first is a win-win situation for both you and the buyer.   Do you see?

Cake has a higher reciprocity value than Milk, people feel they owe you more and are more likely to take part in the upsells. Going up the stairs, from Milk to Whipped Cream: “would you like whipped cream with your cake?” is far more appealing than “would you like whipped cream with your milk?”

Also notice Cake Last, is a scarcity mindset and the Cake First is an abundance mindset.   This is a little known truth, but your market can sniff these cues better than a psychic or a first date.   People buy you and the results they think you have (that they think they will get), that you stand for, not just what you’re selling.    There was a great example Perry Belcher used talking about visiting a rabid fan’s house who had bought every one of Perry’s courses, a whole bookshelf full…and not opened a single one. It may not be the intended result, but Perry got paid and the customer was very happy. A win-win situation.

Look at it another way, your good customers are an extension of your voice; their opinions sway others you can’t reach.  They have blogs, friends, list and social networks.  Imagine you’re at a party telling a group about this cool friend you have. Who would you rather tell them about:  the rock star cake maker, or the milk delivery person?  Exact same thing will happen with your JV’s when talking to their lists about you. Give ’em cake!

This is not to say that you sell crap on the BE, like worthless PLR stuff. Instead of a sharp ramp down in the perceived value like the example it might be a subtle slope or completely flat. If you are delivering a ton of value people will take it anyway they can, the point is to lead with your best foot forward…Give ‘em cake!

To take it a step further, Frank Kern said in a the recording, it would be an interesting thing to give away the entire course for free and then sell the exact same thing, he thinks it would still work.  I’m betting he’s probably right. In fact the Traffic Geyser 10x10x4 system does this as well, knowing people won’t likely search out the other videos.  Hmm.. maybe I’ll try that with my next product.

Why giving your best away won’t hurt your sales

  1. Attention is one of the rarest substances in the universe – anybody who has kids, students or new businesses knows this. People are in different headspaces when casually browsing the web from an email link than studying a course intensely. So much like that person’s name you just can’t remember, it may as well be gone.
  2. It takes several times before things sink in, especially on really new or difficult information. They could easily see a Free thing and forget about it…even multiple times.
  3. People easily dismiss the free stuff, hell Frank Kern has probably $4k worth of potential product material in his blog today most people don’t know about. They don’t know how to look for it (admittedly, Frank does not make it easy to find). Similarly, I know Jeff Walker’s material has enough that just the free has given people enough information to do a successful Launch without buying the PLF course. Most people don’t take advantage of this.
  4. Many people won’t even complete more than 10% of the product so aren’t likely to notice overlaps with the free stuff.
  5. People want the guided tour, or live experience. This is the same reason why people go to concerts despite them sounding worse and see less than a DVD recording of the same for a fraction of the cost.  A free trailer with all the best parts is just getting them excited. So go get those excited…Give ‘em cake!