Free

Why is “zero” such a hot-button word?


Zero is referred to as a hot-button word by Chris Anderson because it provokes a response of irrational excitement. If something is zero cents, completely free, we tend to choose it because there is no visible possibility of loss. No one wants to lose or be wrong, so if it doesn't cost anything, then we believe we can't lose anything or be making a poor decision by choosing it. As soon as the price gets raised to even a fraction of a cent (as is the case with web pages that make you pay per click), the customer likely senses the possibility of loss and has to decide whether the product is worth it. Many times they decide it's not. In human minds, the difference between $00.00 and $00.01 seems so much greater than the difference between $00.01 and $00.02. This difference causes a bend in the demand curve referred to as the "penny gap".

The "penny gap" can be seen in the chapter by one economist's experiment selling Hershey kisses and Lindt truffles. At first, the truffle was $00.15 while the kiss was $00.01, and students overwhelmingly bought more truffles because they were seen as better quality (more for your money, so it's worth the extra 14 cents). Then, the prices were lowered by 1 cent. The truffle was $00.14 while the kiss was free. Students bought more kisses than truffles in this case even though the difference in price remained constant.

These perceived benefits of having "zero" as an option make it exciting to get something for nothing. In our minds we are able to gain a product or service with no possibility of loss and that does tend to provoke a response of excitement.