Most transactions have an upside and a downside, but when something is free, we forget the downside. Free! gives us such an emotional charge that we perceive what is being offered as immensely more valuable than it really is. Why? I think it’s because humans are intrinsically afraid of loss. The real allure of FREE! is tied to this fear.
Zero is not just another discount. Zero is a different place. The difference between two cents and one cent is small. But the difference between one cent and zero is huge!
If you are in business, and understand that, you can do some marvelous things. Want to draw a crowd? Make something free! Want to sell more products? Make part of the purchase free!
Dan Ariely, Predictably Irrational