Chapter 3 zero cost cost

why free stuff Let us spend more money? Why is free so tempting? Why do people scramble for free things they don't need? Discounted high-end chocolates or free normal chocolates, which one do you choose? How does the Amazon bookstore's "free shipping for books over 30 yuan" business promote sales? Should I buy a Honda or an Audi with free oil changes for three years? What's the secret to flooding customers and increasing sales? Do you know "Zero"? Have you ever reached for a coupon and used it to claim a free bag of coffee beans -- even though you don't drink coffee and don't have a grinder or coffee maker at home?Have you ever piled food on your plate in a cafeteria even though you're belching up your throat?Also, do you have an accumulation of worthless free stuff in your house - promotional t-shirts from the radio station, the teddy bear that came with the chocolate you received on Valentine's Day, the little calendar with magnets that the insurance agent sends each year? ?

It's no secret that free stuff feels good.It turns out that "zero" is not just a special price expression, it can also evoke passionate emotions-becoming a source of irrational excitement.If an item was discounted from 50 cents to 20 cents, would you buy it?possible.If it went from 50 cents to free, would you be scrambling to reach for it?definitely will! How could zero cost be so irresistible?Why does free make us so happy?After all, free can get us into trouble: Things we would never want to buy become incredibly attractive when they are free.For example, have you ever packed up your pencils, key chains, notepads, etc., and brought them home after a meeting even though you won't be using them and will probably have to throw them away?Have you ever stood in a long line (it was long enough), waiting and waiting, just for a free ice cream cone?Stores are "buy two get one free", have you ever bought two things you didn't want to buy just for that "get one free"?

Zero has a long history.The ancient Babylonians invented the concept of "zero"; the ancient Greeks debated it in advanced terms (how can something be nothing?); the ancient Indian scholar Pingara matched it with 1 to get two digits; Both the ancient Mayans and the ancient Romans used zero as part of their number system.But the status of zero was confirmed in AD 498: One day the Indian astronomer Aliahata sat up from his bed and called: "Sthanamsthanamdasagunam" (roughly translated as "ten times the difference between one digit and another digit") , resulting in the concept of "decimal".Now zero is further extended: it spreads to the Arab world, where it flourishes; across the Iberian peninsula to Europe (thanks to the Spanish Moors); Here in a place called Silicon Valley, zero is put to good use (combined with the number 1).

The history of zero is briefly reviewed here.However, in the field of money, the meaning of zero is still poorly understood, and I don't even think it has a real history.Still, zero price (i.e., free) has infinite uses, not just for price discounts and promotions, but to help us make decisions that benefit ourselves and society. Why do we snap up things we don't need? Why is free so attractive?Why do we have an irrational urge to go for something free even when we don't really need it? I think the answer is this.Most deals have an upside and a downside, but free makes us forget about the downside.Free creates an emotional charge in us, making us think that the free item is far more than it is really worth.Why?I think it is due to human beings' instinctive fear of loss.The real allure of free is tied to this fear.We choose a free item with no apparent loss.But if the item we choose is not free, there is a risk that we may make a wrong decision and may suffer losses.So, if we were given a choice, we would try to find it in the direction of free.

Therefore, zero is not simply a price in the process of determining prices.Yes, 10 cents can have a huge impact on demand (if you're selling millions of barrels of oil), but the emotional rush of being free is invincible.The price effect caused by zero is very special, which cannot be compared with other numbers. That's right, "you don't spend money on things" is a bit of an oxymoron.But let me give you an example of how we often fall into the trap of buying something we don't want just because of this intractable thing -- free. I recently saw a newspaper ad from a major electronics company offering seven DVDs for free with the purchase of one of the company's new high-resolution DVD players.Let's take a look: First, do I really need a high-res DVD player?Probably not, since not many DVDs are recorded in high resolution these days.Even if you want to buy it, wouldn't it be wiser to wait for the price to drop before buying it?These products will all drop in price -- a $600 high-resolution DVD player today might cost $200 tomorrow.Second, there is a clear timetable hidden behind the DVD manufacturer's offer.Its high-resolution DVD technology system is being relentlessly competed by Blu-ray technology systems, which are supported by many other manufacturers.Now, Blu-ray has taken the lead and has the potential to control the market.So, if you're sold a machine that's going to be obsolete (like the BetaVCRs), how much is it worth for free?These two kinds of thinking, at least rational, prevent us from falling under the spell of free.Still, these free DVDs look really itchy!

Free Museum Days Free also applies to the time field.The time we spend on one thing is, in the end, diverted from another.If we spend 45 minutes waiting in line to get a taste of free ice cream, or spend half an hour filling out a long form to claim a small kickback, then we can't spend that time doing anything else. What I like to talk about most is my own experience, which is the free open day of the museum.In fact, although the entrance fee to most museums is not expensive, I think it is better to arouse my strong artistic desire when the entrance fee is free.Of course I'm not the only one with this desire.So on days like these I find museums to be overcrowded, with long queues, exhibition halls so crowded that it's almost impossible to see anything, and the hustle and bustle of crowds in exhibit areas and cafeterias is annoying.Am I realizing it's a mistake to go to a museum on a free day?Of course I do—but I'm going anyway.

Free also affects how we buy food.Food manufacturers must provide various energy information on the side of the box, such as telling us the calorie value, fat content, fiber content and so on.Will zero calories, zero trans fats, zero carbs, etc. appeal to us in the same way as zero price?If the same general rule holds true, Pepsi will sell more for "zero calories" on the label than for "one calorie." Let's say you're in a bar, having a nice chat with your friends.One brand of beer has zero calories and another has 3 calories per bottle.Which brand do you think is a real light beer?Even if the difference in calorie content between the two beers is negligible, zero-calorie beer gives you the feeling that it is the right choice for your health.Drinking it feels so good - another plate of French fries, waiter!

So, you can charge 20 cents and keep the sale going (as in the case of Amazon France), or you can start a frenzy with the free plan.Think of the power of this idea!Free is not just a discount, free is a different price. The difference between 2 cents and 1 cent is insignificant, but the difference between 1 cent and zero cents is like a world! If you are in business, if you know this secret, you can become a blockbuster.Want to flood your doors with customers?Take out something for free!Want to increase sales?Take out some items for free! Similarly, we can also use free tactics to promote social policy.Want people to drive electric cars?Don’t just lower the listing and testing fees – remove them and it’s free.Similarly, if you care about health, do you notice that early diagnosis is the way to gradually eliminate serious diseases, and want people to get tests like colonoscopy detection, mammogram, cholesterol testing, blood sugar testing, etc. without delay?Don't just lower your bills (lower deductibles on co-pay plans), make these checks free!

I don't think most policy strategists have yet realized that free is a card in their hands, let alone know how to use it.In a climate where the government is slashing budgets, it's certainly counterintuitive to suggest that something should be free.But if we stop and think about it, free can have a lot of power, and it makes a lot of sense to do so. Why are we happy when we work for nothing, but unhappy when we make money? Can you pay for dinner prepared by your mother-in-law? Why is free sex the most expensive? Why are you willing to do volunteer work for free, but don't want to do it when you are subsidized?

Is money the most effective way to motivate employees? Are late fines in effect? Why can't I ask for help? Do more tests really improve the quality of education? pay your mother-in-law You're at your mother-in-law's for a Thanksgiving family dinner.Behold the sumptuous table she has laid out for you!A turkey roasted to a shiny golden brown; stuffed with your favorite homemade fillings.The kids ate with gusto: sweet potatoes slathered in hollyhock syrup.Your wife is also very proud: the dessert is her famous pumpkin pie. The festive celebrations continued until late at night.You loosened your belt, took a sip of wine, and gazed affectionately at your mother-in-law sitting across from you.You stood up and took out your wallet. "Mom, how much should I pay you for the love you've poured into all of this?" you ask sincerely.The room was suddenly silent, and you shook the stack of banknotes in your hand. "Do you think $300 is enough? No, wait! I should pay you $400!"

The famous American illustrator Norman Rockwell could not draw such a picture.A glass of wine is spilled, your mother-in-law stands up flushed, your sister-in-law glares at you, and your niece cries.Next Thanksgiving, nine times out of ten, you'll be watching the TV and eating a frozen lunch by yourself. What's going on here?Why did you put out direct payments to the party so much?The answer is that we live in two different worlds at the same time—one world dominated by social norms, and the other world ruled by market norms.Social norms include people's requests for kindness to each other.Can you move the sofa for me?Can you change the tire for me?Social norms are embedded in our social nature and shared needs.It is generally friendly, undefined, and does not demand immediate rewards.You can help your neighbor move the sofa, but that doesn't mean he has to come over and help you move it right away, like opening a door for someone—it brings pleasure to both of you and doesn't require an immediate, reciprocal return. Another world - quite different from this one - is ruled by market norms.There is no friendship here, and the boundaries are very clear.The exchanges here are black and white: wages, prices, rents, interest, and costs and profits.Such relationships are not necessarily evil and vulgar—in fact, they include self-reliance, innovation, and individualism as well—but they do imply comparisons of interests and timely payoffs.If you're in a world ruled by market norms, you get paid for what you do - it's always been that way. Are fines effective in preventing lateness? My good friends Yuri Grnizzi, a professor at the University of California, San Diego, and Aldo Rusticini, a professor at the University of Minnesota, have done an ingenious test of the long-term effects of switching from social norms to market norms.A few years ago, they conducted an experiment in a daycare center in Israel to see whether the use of fines could effectively reduce the phenomenon that some parents were late to pick up their children. Yuri and Aldo concluded that fines don't work well, and in fact have long-term negative effects.why?Before fines were imposed, there was a social relationship between teachers and parents, and social norms were used to restrain lateness.So if parents are late — which they sometimes are — they feel guilty about it — and that guilt compels them to pick up their kids on time in the future. (In Israel, guilt seems to be more effective at disciplining people.) But once the fines were imposed, daycare centers irrevocably replaced social norms with market norms.Since parents are paying for their tardiness, they interpret it in terms of market norms.In other words, now that there is a fine system, they can decide whether to come early or late.Needless to say, this was never the original intention of the day care center. But the fun is yet to come.The most interesting thing is that a few weeks later, the day care center canceled the fine.Which is to say back to social norms on the part of day care centers.So are parents going back to social norms too?Will their guilt come back too?absolutely not!Since the abolition of fines, parents have remained the same.They continue to be late to pick up their children.In fact, the number of late parents actually increased after the fine was removed.In the final analysis, social norms and market norms are eliminated. This experiment revealed an unfortunate truth: Once social norms collide with market norms, social norms drop out.In other words, social norms are difficult to rebuild.Once this blooming rose has fallen from the branch—once social norms are defeated by market norms—it is difficult to have any effect. Can't have both fish and bear's paw What is the conclusion?If you are a company, my advice is to keep in mind that you can't have your cake and eat it too.You can't treat a customer like family one moment, and business the next—or worse, the next moment if you think it's necessary or profitable to treat him as a thorn in the side or a competitor.Social relationships are not like this.If you need social connection, you can seek it, but remember that you must maintain it whenever and wherever possible. On the other hand, if you think you have to play by the book from time to time—charging extra for additional services, managing customers who don’t line up—then you probably don’t need to waste money building your company’s vague and amiable image.In this case, stick to a simple principle of value: Be clear about what you can offer and what you can expect in return.Since you haven't established social norms, or even expected them, it's impossible to violate them - at the end of the day, it's just business. Companies also try to establish social norms with their employees.It wasn't like this in the past.A few years ago, the U.S. labor market was more of an industrialized, market-driven field of exchange.Employees back then often had a 9-to-5 clock mentality where you put in a 40-hour shift and got your paycheck on Friday.Now that workers are paid by the hour, they know exactly when they are doing work for them and when they are not.The closing bell in the factory (or an equivalent device in the office) rings, and the sale is completed.This is clearly a market exchange that works for both parties. Companies now see the advantages of creating an atmosphere of social exchange.At the end of the day, in today's marketplace, we can make the intangible.Innovation is far more important than machines.The boundaries between work and leisure have also blurred.Corporate managers want us to think about work in the shower on the drive home.So we were given laptops, mobile phones, and Blackberries to erase the lines between work and home. Many companies are moving from hourly wages to monthly wages, which further blurs the notion of a 9-to-5 workday.In this 24/7 context, social norms have an even greater advantage: they can make employees enthusiastic, hardworking, and caring about the company.Under market norms, employees' loyalty to employers often weakens, while social norms are the best way to motivate employees and keep them loyal. Open source software shows potential for social norms.In Linux and other collaborative projects, you can post about a problem in any forum, and soon there will be lots of people responding to your post telling you how to fix the software -- at their leisure.Can you pay for this service?Probably.But if you spend money to hire people of the same level to repair it for you, they will open their mouths like a lion, and they will literally ask you for an arm and a leg.On the contrary, people in these online communities are willing to contribute their time to society as a whole (they get social benefits from it, just like we help our friends paint their houses).What can we learn from this and apply it in a business environment?That is, there are other forms of social rewards that can effectively motivate us-one of which is the least used by companies, and that is encouragement, social encouragement and honorary encouragement. If employees promise to go the extra mile to meet an important project deadline (without even taking care of their families), or if they catch a flight to a meeting at short notice, then they should be compensated accordingly - such as being taken care of when sick , or to keep their jobs when the market threatens them. While some companies and employees have been successful in creating social norms, they are currently struggling with the pursuit of short-term profits, foreign sourcing, draconian cost-cutting, etc., which can undermine all efforts.In social exchange, at the end of the day, people believe that if something goes wrong with them the other party will step up to protect and help them.This belief is not written in the contract, but it is a moral obligation to provide care and help in times of need. Again, the corporate side can't have both.In particular, I'm concerned that the sharp cuts in employee benefits seen recently - in child benefits, pensions, flex time, gyms, restaurants, family picnics, etc. - could take a toll in the area of ​​social exchange, impacting employee productivity .In particular, I am concerned that cuts to health care benefits could largely shift the social relationship between companies and employees to market ones. If companies are to benefit from the advantages of social norms, they must do more to foster those norms.Medical benefits, especially comprehensive health insurance, are one of the best ways for companies to express their willingness for social exchange.But what are many companies doing?While they are demanding higher deductibles for insurance plans, they are narrowing the scope of benefits.In short, they are undermining the social contract between employees and firms and replacing them with market norms.Can we blame employees when they have a better chance of jumping ship, since the corporate side raised the issue in the first place, forcing employees to slide from social norms to market norms?Not surprisingly, "loyalty to the company" has become a paradoxical watchword for the relationship between employees and companies. Organizations such as businesses should think carefully about how people respond differently to social and market norms.Are you giving your employee a $1,000 gift or $1,000 in cash?Which is better?If you ask employees, most likely want cash rather than gifts.But gifts have their own value, and although their real value is sometimes misappreciated and underestimated, they can play a role in promoting the social relationship between employers and employees.Think of it this way: Who do you expect to work harder, be more loyal to the company, and love his job more—the one who gets $1,000 in cash, or the one who gets a personal gift? Of course, a gift is a symbolic gesture.People go to work for a salary, not a gift.For that matter, no one wants to work for nothing.But if you look at a company like Google, which offers its employees a variety of benefits (including fancy lunches), you can see the rapport that an emphasis on the social side of the employment relationship can create.When social norms (such as the excitement of co-entrepreneurship) are stronger than market norms (such as salary increases with promotions), the value employees can add to companies (especially those that are just starting out) is indeed impressive. If businesses start thinking in terms of social norms, they will actually realize that social norms build loyalty and, more importantly, enable people to develop themselves to meet the requirements of today's businesses: flexible working, caring about the company, and active participation Corporate Affairs.This is what social relationships bring about. We should always think about social norms in the workplace.American labor productivity increasingly depends on the talent and effort of workers.Is it because we are driving business from the realm of social norms to market norms?Are employees thinking about money rather than social values ​​like loyalty and trust?What impact will this have on U.S. labor productivity, in terms of innovation and participation, in the long run?What about the "social contract" between government and citizens?Are there risks too? On some level, we all know the answer.For example, we understand that people don't die for money.Police officers, firefighters, soldiers—they don’t die for their weekly wages, it’s social norms—professional honor and responsibility—that motivate them to give their lives and their health.A friend of mine in Miami once patrolled sea waters with customs agents.Armed with AK-47 rifles, customs agents can punch holes in drug smugglers fleeing overseas.But did he shoot?No way, he replied.He wouldn't die for the government's salary.In fact, he revealed, these guys had an unspoken agreement with the dealers: If the dealers didn't shoot first, the narcotics wouldn't shoot either. (This is probably why we rarely—if ever—hear about shootouts in America's "war on drugs.") How can we change this situation?First, we could dramatically increase the wages of federal drug agents for whom they can risk their lives.But how much does it cost?Equal to the income of a drug dealer sailing from the Bahamas to Miami?Or we improve social norms and let anti-narcotics officers understand that their mission and our respect for them (like our respect for policemen and firefighters) is far higher than their wages. stabilized and will save our children from dangers of all kinds.Of course, this is just some advocacy role, but it is indeed feasible. Specifications for Burning Man This is a radical point of view, and it is unimaginable.But I tried it once a few years ago.At that time, I got a call from John Perry Barlow, the original lyricist for the Grateful Dead, inviting me to an event.It really was both an important personal experience and an interesting walkthrough in creating a "moneyless society".Barlow told me to definitely go to Burning Man with him, and if I did, I would feel at home. Burning Man is an annual, week-long event in Nevada's Black Rock Desert that typically attracts 40,000 people. "Burning Man" originated in San Francisco's Baker Beach in 1986. A small group of people designed and built an 8-foot-tall human figure out of wood, and a dog, which was smaller than the figure, and finally set fire to them.Since then, the wooden figurines have grown in size and attendance, and the event is now one of the largest arts festivals in the region, as well as a pilot for ongoing temporary community experiments. There are many unusual things about Burning Man, the most noteworthy in my opinion being the abandonment of market norms. Coins are not accepted at all events at Burning Man.Instead, the whole place operates on a gift-exchange economy—you give something to someone and know it will be given back to you (or to someone else).So, people who can cook can cook, psychologists can provide free consultation services, masseuses can massage people lying on the bed in front of them, and people with water can provide people with showers.People handed out drinks and homemade jewelry and hugged each other. (I handed out puzzles I made at MIT's Playcraft Studio, and most people enjoyed doing them.) Everything felt foreign to me at first, and it didn't take long for me to settle into the Burning Man norm.I was amazed, in fact, that I found Burning Man to be the most receptive, social, caring place I've ever been.I can't say I'd love to live 52 weeks a year in an environment like Burning Man.But this experience has convinced me that with more social norms and less market norms in reality, our lives will be more enjoyable, more creative, more fulfilling, and more fun. The answer to the problem is not to reshape society to the standards of Burning Man, but I believe that as long as social norms are kept in mind, it can work, and it is much larger than we think.In fact, if we carefully recall how market norms have taken over our lives over the past few decades—its emphasis on high wages, high incomes, high consumption—we realize that it may not be a problem to partially regress social norms. bad thing.In fact, it may bring a fair amount of the old civilization back into our lives.