Like many personal finance bloggers, free is my favourite price point. Call it frugal or cheap, but free is the price I like to pay. But now I’ve got to thinking, what is the price of free? Am I really getting something for nothing? Or am I shortchanging other people? Are there ethical considerations in free?
Time vs Money?
I used to think I was trading free for time, in a zero sum game. So a free offering would take me longer, or require me to spend more time. But I as I think about things more, is this really true? And am I really using my time effectively, given I can now earn a reasonable living?
A simple example of this is my insourcing of household tasks, such as cleaning. I save money by not outsourcing, and pay for this with time. But as I can only work 5 days a week, I’m comfortable making this decision. Taking a more complex example, I’m happy to fill out small surveys to get things for free. This involves a small amount of time being traded to avoid spending money. The opportunity cost is clear.
Hitchhiking is another idea of the trade off between time and cost. You can travel for free anywhere someone will take you, but you will pay with time. It takes time to get a ride, and even more to find someone going the right way. What is the opportunity cost of that time? Not that I’ve ever been brave enough to hitchhike, mind you.
Am I selling to to adverts?
Free papers are everywhere in London now, outside every major and minor terminus there are people employed to fling papers in front of you. The business model is that these papers and magazines are given out free to everyone. This results in a massive distribution, to a popular and profitable segment of society. Therefore advertisers will pay more to advertise and the publications don’t need to charge consumers. Although the content of these publications vary, the take up is huge given the price, and the model seems very sustainable.
Likewise for software or a website, if you offer me a paid version, or a free version with adverts, I will always take the free version. Yet I am someone who hates adverts, and has ad-blockers installed everywhere. My frugal nature means I instinctively take the free version, knowing I am someone who never responds to ads. I can’t think of any occasion on the last 10 years where I have seen an ad and purchased. I try to spend my disposable income as closely aligned to my values as possible, so advertising does not work on me.
Where do the ideas come from?
Something I’m struggling with lately is paying for content, in particular writing and graphics. I love reading interesting and well researched articles and can spend hours appreciating great visuals. But sometimes I do wonder how these people get paid. Stories abound of writers being asked to submit new work as well as a significant portfolio to obtain new contracts and roles, and this working for free worries me.
I do believe that creatives deserve paid, but I struggle to reconcile my actions with this. Do my actions cause others to be harmed? I believe in being frugal, and not harming others. As opposed to being cheap at all costs. I believe people deserved paid a fair amount for work, and I need to reconcile my actions with this. I need to do more research here.
Am I the product?
So my data has value; I started to understand this in the Tesco Clubcard days. For those across the pond, Tesco were one of the first UK retailers to make use of consumer data, and give consumer rewards for this via the clubcard scheme. Here the deal was clear, you let them know what you were buying, where you were buying it and when. Then you got vouchers and coupons as a reward for selling your data. Tesco was known to have great consumer analytics, and was rumoured to have segmented households down to segments of 7 other households with similar habits. Personally I’ve always been ok with sharing these items, as I feel it ultimately benefits me if they stock items I want to buy where I want to buy them.
Nowadays, google and facebook are big providers of free platforms. They hold an enormous amount of data on us, but do we all really understand what they are doing with it? I use gmail for my business, personal and blog accounts, and google calendar schedules my life. My android phone knows where I am most of the time. As my life really isn’t that exciting or controversial, I’m not too unhappy with this sharing. But I do wonder what they are doing with it? Is my data valuable in some way I don’t realise? But given I get a good email, calendar and phone service for free, I think I’m ok with this.
Do you want to dive deeper?
It’s a fascinating topic, that I want to personally dive deeper into and really develop my thinking. This is only the start of my awakening, and I think data will become a big topic, especially with data regulations (GDPR) being implemented this year in the EU.
- This economist article delves into the idea of the free economy.
- And this article and this one define ads as the cost of a free internet.
- You can watch short BBC documentary on the virtual revolution – the price of free
So in summary, I struggle to pay for things I can get for free, hence my 80% savings rate.
I’m happy when I’m the product and I know and understand what they are doing with my data. When it moves a bit more complex, I get a little concerned about my data. Although I have concerns, I’m careful with what I share, and am still happy to accept this as the price of free.
However, I am worried that my choices are impacting others in wider society. I’m starting to think more about relaxing that adblocker, to help creatives get paid a little. And to think more seriously about the impact before using free goods.
Over to you
- Are you a fan of free?
- Do you think about the true cost?
- Are you comfortable with your choice?