The Cost Of Free Doughnuts: 70 Years Of Regret
npr.org
npr.org
In 1944, he led a recon mission to find a river crossing for our army in southern France. He came under extremely heavy German machine gun and mortar fire and was forced to advance through a minefield to get his men to cover. In the process, he stepped on a mine and was severely wounded, losing his leg. Their mission being vital, he ordered his men to leave him and find that crossing, which they did. Although they sent a medic to recover their officer, upon finding him the medic refused to give him morphine, saying that he didn’t have enough to waste on a man who would die in a few minutes anyway. He was then abandoned and listed as dead.
Some time later, a Red Cross doughnut wagon happened by. One of the two person crew noticed Kenny laying unconscious in the minefield and went to check if he was alive. Finding a pulse, they brought him to the doughnut wagon, which was cleared out and converted to an emergency operating room. These two Red Cross canteen workers performed major surgery on the spot and saved his life at the risk of their own.
What’s a few cents for doughnuts compared to that?"
Imagine, in a minefield, under heavy machine gun and mortar fire - "Donuts anyone?".
Initially, the site was free, but from day 1 I made it clear that we were going to charge a membership fee at some point. That, I think, was the biggest thing.
I also gave the first several thousand members - who had already become the most vocal and most dedicated members - a chance to earn a free lifetime membership if they completed certain goals that would help me to test the site's functionality. Things like sending ten private messages, making ten forum posts, things like that.
The business wasn't a smashing success, but this part of it was, I think. Some members left once we went for-pay because they simply weren't willing to pay for things online, basically. However, there was no rancor or anything.
80% of the users stuck and paid, but there are indeed a few that hold an utterly irrational resentment. It goes so far that they prefer to discuss this matter for hours and hours and use some crappy software, instead of just paying the damn 12 Euro a year.
Then I figured that a Euro was a bit too low. In Germany, VAT is usually included if you see a price as a private customer, unlike in the US, where you get the VAT added at the checkout. So, 19% VAT on a Euro is a substantial cut.
I increased prices to 2€, which worked alright, only a few people got upset, but again, many continued to use the service. Still, I feel like I'm now locked in at a relatively low price point and it gets tougher to justify another rise in price.
or weren't able to
http://www.npr.org/blogs/money/2012/07/13/156723516/episode-...
I've been listening to Planet Money since it started during the 2007 meltdown. It's been a great resource for explaining some of the tougher financial stories in an easier fashion while keeping it interesting. Definitely a recommended podcast.
http://www.npr.org/blogs/money/2012/11/15/165143816/why-coke...
Where's the payment equivalent of a facebook "Like" button? Now that I mention it, facebook are probably well positioned to introduce such a thing.
That is not the point Ariely makes. Charging anything at all changes the nature of the transaction from a social one to a market one and completely changes the context in which people view it. It's worth reading.
It's on Amazon.com and they have a patent for it. :(
I get what you're saying and I agree that the process is a hindrance at the most basic level, I just don't get that specific example.
Pretty much sums up why that is.
It was never advertised as dvd plus free trial steaming. if it was, was in small print.
My Dad, a (peacetime) Marine Lieutenant, had a Sergeant who was livid about being asked by the Red Cross volunteers to pay for coffee on his return trip from the Korean war in the early 50s. That left a lasting impression my Dad, who's saying on that was, "A Marine Never forgets." He never supported the Red Cross, though he was hardly stingy when it came to paying for things he thought deserved to be paid for, and that included accepting raised prices.
There's an element of moral indignation in the story that's missing from "Oh, snap, this used to be free and now I have to pay for it. That sucks."
That was my thought exactly.
I think the main difference between the two scenarios is competition. There is only one Red Cross, but for most apps out there, there are likely a few others that do almost exactly the same thing. So, if one starts charging, you can decide to either switch to a different, free alternative, or you can decide to pay for the app.
Being able to even make that decision is empowering (so what if donuts cost money? muffins are still free!). In the Red Cross's case, there was no choice; the soldiers had no power: you either pay for a donut, or you get nothing.
People with very good work conditions may always long for that time when their favorite manager was there, or when the company was riding a wave of success. Their conditions may be objectively better than many other companies but because they had a great situation at one point, everything else pales in comparison. It can take years for that to change.
Using the doughnuts analogy, I wonder how things would have worked out if they continued to give away the plain doughnuts for nothing, but added a new line of premium iced doughnuts which attracted a charge? Personally I wouldn't mind, and I think that a lot of people would be ok with this.
Stemming from this, you really need to have a good reason to charge people for something they were previously using for free.
Personally, I don't think you can start charging for something that was previously free (without significant value add). By all means offer a paid upgrade with particular value add, but never do the wrong thing by your (thus far) loyal users.
I think it was a net positive, though it's hard to measure. Statistically, these grandfathered members have outspent other members. However, it's hard to say whether or not they might have spent even more had they not been given free lifetime grandfathered access.
A lot of these members have gone out of their way to buy perks for themselves and memberships for other members.
I should mention my site was essentially a community site, so there was a strong connection with other members - they wanted their favorite members to remain on the site. Additionally these have been the most active members when it comes to referring new paying members to the site.
To additionally complicate things, by giving grandfathered memberships to excellent community members, I think that these "anchors to the community" attract members in ways that would be completely impossible to quantify - I don't know how to measure the number of people that joined the site simply because they saw it did have a core of dedicated members.
To sum it up, for a community-based site, grandfathered community members quite possibly do more than pay for their grandfathered membership status.
I'm sure the returns are far less for other types of online businesses. You might join a community because you see that it has dedicated members, but I wouldn't necessarily be more likely to order a sweater from an online retailer because a bunch of people have grandfathered free shipping upgrades or something.
>>>For the veterans, the Red Cross went from being a little like Mom, to being the corner store.
Who really thinks of Google, for example, as Mom?
Edit: People tend to have feelings regarding companies and institutions. People who are interested in tech and computers have stronger feelings about companies like Google, Apple and Microsoft. At least in Google's early years, people had a tendency to see Google as a figurative Mom, more interested in providing the best search engine and some nice free services than making money at any cost.
In 2013, we willingly have webcams and mobile phones which can conceivably monitor us the same way, and governments that are willing to do so.
Google ain't the only Big Brother.
I think even people who love Apple to the point of slavishness think of them as a company, not as a Mom.
We should all be using encrypted mail all the time, but instead we just feed our mail to the FBG (Federal Bureau of Google).
http://www.youtube.com/watch?feature=player_embedded&v=k...
But tongue in cheek is only funny when it's _somewhat_ true.
1) Business travelers can expense the checked bag fee, so they don't care.
2) Other travelers still have a free option: the carry-on bag.
I always board my flights last for various reasons, and I've noticed how people are literally hanging over the ropes to get in the boarding line when their section is called. It started making sense when the staff would announce that ALL overheads were now full. People were packing even more into those carryons.
At least one airline, Spirit Air, already does. I am sure more will follow this practice.
and if it wasn't, lobbying sure made thanks to the liquid rule.
It used to be something like a dollar on launch. Wonder how it follows inflation, though.