Six costs of free – and how to avoid having them eat your lunch

There’s not a thing wrong with free.  In fact, free is one of my favorite four-letter words.

But, it always pays to remember that “free” is not the same thing as “without cost.”  Something that’s free may be without monetary cost, but there’s almost always some other cost.

The six costs of free and how to avoid having them eat your lunch

There’s no such thing as a free lunch.  Somebody pays for it.  That somebody may be you.

Here are six types of costs of free things:

1.  Time Costs

Time is not money.  It’s far more valuable than money for a couple of reasons:

  • Time can only be spent once.  Then it’s gone.

Recently I tried out some computer software for a free coffee mug.  I’ll justify the time I spent installing the software on my computer and running it through its paces (about half an hour) because (a) the website offering the deal doesn’t sell the mugs, (b) the mug looks pretty hefty, and (c) the website is really cool and I’ll get some coder cred for owning the mug.  But I still spent a half-hour, and I’m trusting them to send the mug (which I haven’t gotten yet).

The time cost of free

  • Trading time for something of monetary value broadcasts what your time is worth.

Spend several days camping outside of an electronics store prior to Black Friday to save (maybe) $200 on a big screen TV, and you’ve just broadcasted figuratively, and perhaps literally, to the world that your time is worth less than minimum wage.  Sitting through an hour-long (or more) sales pitch for a small appliance broadcasts the same.

  • Even after spending the time, you may not even get the item.

I mentioned above that I haven’t gotten my mug yet.  The software company could decide not to send it to me, because I haven’t responded to any of their requests for more information about how I intend to use the software.  The free item was just bait to get me on the hook for a larger sale, and if they write me off as a potential customer, they may decide to not send me the mug, and tell me that I was too late sending them proof that I had tried the software.  Or some technicality.  (I’m not saying that they will, just that they could.)

How to avoid having this eat your lunch:  Step back to think about what the value of the free item.  Then estimate how much time it will take to satisfy the requirements to get the free item, as well as how likely you are to receive the item.  Then you can decide whether to bite or not.

2.  Fuel Costs

Depending on what the freebie is, it may also take fuel to get where you need to go to get the freebie.  If you live in a place with a high Walk Score®, then you’re fortunate in this regard.  We’re not; on a scale of zero to 100, with 100 being best, our address is a 10.  But we are about a mile from a Walmart, so that makes up for it a bit.

Did you put a book on hold at the library?  Yeah, it’s free, but you still have to go to the library to pick it up.  And then go home.  A couple of weeks later, guess what?  You get to go back to the library to return it, and then go home again.

The fuel cost of freeI listened to Stapler Confessions’ Ignite talk at FinCon in New Orleans this past fall.  She talked about how she consistently got products for free — or even better than free — at Staples.  Her strategies were clever.  I don’t know how close she lives to a Staples, but for us it would be a 45-minute drive one way to get there.  To take advantage of any of these strategies, we’d need to factor in several gallons of gas, plus all of the time needed to get to Staples and back.

How to avoid having this eat your lunch:  Gas is less expensive than it has been, but it still is a cost.  Consider the cost.  If you can combine other errands with a trip to the library, or to wherever your freebie of choice is, it takes some of the sting out of getting there.

3.  Aggravation Costs

If given the choice between free software and paid software, I’ve found that the free software is a bit clunkier to use, a bit tougher to install or support, a bit rougher around the edges, and a bit less powerful or feature-rich.

A bit more … aggravating.

I had used OpenOffice for a long while, but eventually I broke down and bought Microsoft Office.  I had had it with trying to deal with OpenOffice importing others’ Microsoft Office documents … kinda.  Or taking several steps to do things that I knew I could do with a single step in the Microsoft version.

The aggravation cost of freeIt’s fairly common for software companies to offer a free version of their products alongside a paid version.  This is the freemium business model (a portmanteau of free and premium).  They make the free version of the product just aggravating enough to use in order to get you to upgrade and “unlock” the premium features, which are likely the ones that make the product really useful.

Consider these freemiums:

  • Feedly.  Overall, the free Feedly account is pretty good, but the Buffer integration in the free version is slightly annoying.  I’m able to get rid of the Feedly branding, but adding the Twitter ID is a premium feature (premium is $9/month).  For now, I need to look up a blogger’s Twitter ID before I add it, and type it in.  Adding things to OneNote or EverNote from Feedly is also a premium feature.
  • Buffer.  I’ve begun using Buffer for social sharing.  The ten-item limit on the free version, though,  is a bit tight.  It doesn’t give me much of a buffer.  (Heh, see what I did there?)  But with the Awesome Plan for $10/month, I unlock room for two hundred posts, and twelve social profiles.  (Yes, that’s really what the plan is called, and yes, they used the word unlock on the description page.)
  • Dropbox.  Dropbox is a slick cloud storage service that plays well with a bunch of other services.  I’ve been able to get by with a free account which means my Dropbox is about the size of a shoe box (2 GB).  Paying $9.99/month (I see a pattern here!), though, unlo … I mean, multiplies my storage 500 times.  A full shoe store, as it were.

How to avoid having this eat your lunch:  Become more easy-going and don’t get aggravated so easily.  (Kidding.)  But seriously, there’s always the option of not using a free service if it really isn’t making what you do easier or more effective.  If the price is right, and you like the service for the most part, try the upgraded version.  It could end up being well worth the price.

4.  Information Costs

We all love us some Facebook, don’t we?  I sure love me some Facebook.

Well, not all of us, but more than 1.39 billion of your fellow Earthlings love themselves some Facebook each month (as of January 2015).

And likely over a billion of those users know that, although it doesn’t cost a dime to join Facebook, they pay with the information that they give Facebook with every click, every message, and every like.

Facebook gets to know its users very, very well.  And advertisers pay Facebook a lot of money to tap into how well they know you.  Why?  Let’s say you were opening a trendy spa in Albuquerque, and you wanted to show an ad to encourage people to join.  You’d want them to live in or near Albuquerque.  You’d probably want them to be younger, and you’d want them to be interested in meditation.

The information cost of freeWell, I can specify all of these things with a Facebook ad.  (I just checked!)  This is powerful, laser-precise billboarding.  The spa owner doesn’t pay for views by people away from Albuquerque, or by older people, or by people who are ambivalent about meditation.

And every one of those people who saw the ad had given Facebook that knowledge just by being themselves (or something close to it).

It’s not just Facebook, of course.  So much of our personal information is out there in hundreds, or thousands, of different databases, and is being monetized every second of every day, and sometimes long after a person uses a website.

Do you notice that, after you’ve visited a particular website, all of a sudden you see ads for that website everywhere you go?  It’s not an accident.  You’re part of what’s called a retargeting campaign:  You’re shown an ad because of where you’ve been.  Unless you go to fairly great lengths to opt out, information is collected about you from where you go on the web.  If you consume content for free then you generally give them some level of information about your browsing.

How to avoid having this eat your lunch:  If you’re concerned about how companies use the information you give them when using their site, they generally will tell you in their terms of service and privacy policy.  This will give some idea of the cost associated with “putting your information out there.”  You may be able to opt out of certain uses, but not others.  In the latter case, they only remedy is not to use the service or visit the website.

5.  Mindshare Costs

Almost as long as there’s been broadcasting, there have been commercials.  Broadcast television is about a quarter commercials.

My parents-in-law are currently watching Numb3rs on DVD.  No commercials.  But they paid for the privilege of watching them (legally) without commercials.

My wife has Spotify Premium for $9.99/month — (there’s that price point again!) — for which she gets to listen to music without ads in between, as well as better quality, offline listening, and a few other niceties.  The free version has ads in between songs, just like on commercial radio.

YouTube is free, and has everything under the sun.  I can listen to music and watch whatever.  But there are ads.  Oh boy, are there ads!  The ad server on YouTube interrupted a Steely Dan album five times as I was playing the album.  (At least it didn’t do it in the middle of the songs!)

The mindshare cost of freeSo, as we watch things for free, or listen to things for free, we pay with mindshare — with our attention, with our eyeballs, and our eardrums.  Our minds are exposed, temporarily, with whatever message the highest bidder paid to deliver to us at that slice of space-time.

This mindshare component can be very costly.  Big companies pay a lot of money to advertise, and the people they hire are good at it.  They know the best ways to influence people to buy what their clients are selling.  Give the marketers an inch, and they’ll use every trick in the book to take a mile.

The fact that we’ve gotten better at becoming ad-blind when consuming content just makes the marketers more persistent.  One of the more aggressive advertising tactics involves splitting what could be a 500-word list-type article into ten to fifteen slides, with bite-sized amounts of content and lots of ads on the page, which refresh with each advance of the slideshow.  I’ve even seen some sites split this up even more, requiring two or three browser refreshes per slide and revealing the content one sentence at a time.  That’s a lot of bids for my attention for a modest amount of content.

How to avoid having this eat your lunch:  I don’t know — how susceptible are you to advertising?  If you are easily swayed, then realization and awareness of the advertising goes a long way.  Or, you could try eliminating the advertising with a browser plugin.  Some websites may have a premium option — for, oh, I don’t know, $10/month? :) — that gets the ads out of your face.  (One word of caution:  If you really like someone’s stuff, it doesn’t encourage them to produce more by actively denying them the fraction of a cent they get when an ad shows up.  But that’s your choice, of course.)

6. Intangible Image Costs

Getting things for free can be frugal.  It can also be just plain cheap, or even outright tacky.

Picking up a whole fistful of napkins when picking up a pizza, proudly claiming to the group you’re with, “Hey, they’re free,” is tacky.

Or, at least I think it’s tacky.  And I don’t think I’m alone.

What does this kind of tackiness do for your image?

It’s hard to tell.  Stuff like this is only part of the picture of who a person is, of course.  But it is part of the picture.  For some people, that action is dismissed without a second thought, but for others, that person is dismissed without a second thought!

The intangible image cost of freeDoes that kind of thing matter to you?  It may not, in which case hey, take as many free napkins as you can stuff into your pockets.  But if you find that people don’t want to hang out with you after a while, then it may be time to reconsider.

There are similar intangible costs associated with using certain components for free with a business.  You may have noticed an increasing number of websites with a little blue bar in the upper right corner, and upon hovering over it you see a crown peek out.

These websites use AppSumo, and it’s a great product suite for website owners.  It’s free to install and use a lot of the features.

One thing that you can purchase is the ability to hide that little blue bar.  It costs $10 once.  (Not per month; I know you were thinking that!)  I paid the $10 not because I wanted to keep AppSumo all to myself, but because I didn’t want the people who knew the deal that I was too cheap to pay the $10.

Does this mean that I think people who haven’t hidden the bar are cheap?  Not necessarily.  They could not be hiding it for different reasons — it could be the way they say “thank you,” and that’s fine.  Every website owner can either advertise the service with the badge if they use the product, or pay $10.  The AppSumo guys win either way, and the website owner gets to use the product either way, too.

For me, it was worth the $10 not to even give the hint that I would exchange having a (very slightly) more cluttered page in order to use the product for free.  That’s a cost I can control easily, and I feel that it makes things look more professional.

How to avoid having this eat your lunch:  If not appearing ill-bred is important to you, then choose carefully what free things you take.  If looking professional is important to you, then don’t undermine your image by allowing someone else to encroach their brand on yours by using their stuff for free when you have the option to white-label it.  Either of these costs can be a lot larger than you realize.


Congratulations!  You’ve made it to the end of what I believe is the longest post I’ve written on this blog, ever.  (Over 2,700 words!)

Here’s a quick recap of the six costs of free in this post:

  1. Time costs.  Getting something for free often takes time, which cannot be replaced.  Spend your time wisely, and count the cost of your time.
  2. Fuel costs.  Don’t forget to factor the cost of filling up your tank, either.  That counts, too!
  3. Aggravation costs.  Free products are sometimes deliberately aggravating to use.  The companies want you to buy the paid version.  Free is hardly worth it if it’s inducing misery.  Decide how much aggravation you’re willing to endure.
  4. Information costs.  Your information about who you are, where you live, and what you like is more valuable than you may realize.  Companies giving away things in exchange for your information know this.  Determine whether you trust what they’ll do with your information, and what parts of it they get.
  5. Mindshare costs.  Getting content for free, but watching and listening to ads?  You’re being programmed to buy things you may not need or even want!  Awareness is a good chunk of the battle.
  6. Intangible image costs.  Like it or not, some people will make snap decisions about you or your business based on how you handle free stuff.  Think about how this appearance affects your relationships, personal and business!

What are some of the other hidden costs of free stuff that you’ve run across?  How do you handle them?

Rebate site review:

I use cash-back rebate sites for my purchases whenever it makes sense. After getting a free account at these sites, it’s only 30 seconds or so to save a few bucks — or even lots of bucks! — at thousands of online stores.

Using Dollar Dig is simple:

  • Sign up for a Dollar Dig account, which is completely free.
  • Log into Dollar Dig before you shop online.
  • If Dollar Dig offers cash back on some purchases from the store you’re going to buy from, go to that store through the link on Dollar Dig instead of typing it in your browser.

That really is it! It’s that simply to start building up rebates.

How it works behind the scenes

Save Money when you shop online with!Dollar Dig has to get its money from somewhere in order to pay you your rebates. I know for absolute certain that the money doesn’t come straight out of the website owner’s pocket. The About Page is short and sweet and gets to this point in the first sentence: “DollarDig, LLC is a small business owned by one guy – a cheap one at that.” (I’d probably say frugal rather than cheap, but his word, not mine. :) )

Anyway … the quick answer as to where your rebate money comes from is that the store you bought from awards a commission to Dollar Dig for sending them your business. Once that happens, Dollar Dig shares part of that commission with you in the form of a rebate.

Signing up for Dollar Dig is free

Dollar Dig is a newer cash-back rebate site. has it in its current incarnation only back to 2013, so it’s looking to give some of the older players a run for their money — figuratively and literally.  The minimum payout amount is $25.  There are 2,600+ sites with rebates available on Dollar Dig, and of course it costs nothing to cash in on these rebates.

So sign up for Dollar Dig and then check to see how the rebates there compare on the cash-back comparison engine!

Nine tricks for buying discounted gift cards safely

Buying discounted gift cards can be an easy way to spend a bit less. There are a number of websites that sell discounted gift cards, both physical and electronic. Depending on the retailer, the savings can be a few percent to 25% off, or more.

Though buying discounted gift cards is straightforward, I do concede that it’s not completely without risk, for a few reasons:

  • Someone else has the gift card’s information, and could potentially spend the balance down even after they’ve sold the card to the broker website, or directly to you.
  • Physical cards need to be mailed to you, and they’re active while they’re in transit.  Even though there are hefty fines for tampering with the mail, it’s a potential headache to track down the thief or to get restitution.
  • The card could have been stolen somehow, or could have been purchased with a stolen credit card.  And you’re the not-so-happy new owner.

Are discounted gift cards a lost cause?

Buy discounted gift cards safelyDespite these risks, I’m still of the opinion that, done correctly, buying discounted gift cards is low-risk, or at least no different than buying anything else second-hand.

I search with Google for instances of people buying stolen gift cards (unwittingly) and subsequently getting into trouble.  People have gotten into trouble for using stolen gift cards, but in all cases I found they knew that they were stolen (and may have even stolen them themselves).  Though the terms and conditions of most of the websites selling discounted gift cards expressly limit their liability in such cases, there appears to be little cause for worry.

In the case of the bigger discount gift card brokers, they guarantee the physical cards they sell to you for at least a month and a half, often longer.  Here’s a breakdown of the length of the money-back guarantees for a number of the big players:


Discount Gift Card Site Money-back guarantee* Life of the card 1 year 100 days 100 days 100 days 60 days 45 days 45 days 45 days
*Physical cards only. As of 27 Feb 2015

Additionally, from anecdotal accounts I sense they actually follow through on these guarantees, and without hassle.  (I haven’t had issues with cards yet with any of the sites listed above.)

Here are a number of precautions that you can take to greatly reduce the risk of having a bad experience:

  1. Buy from established sites with good track records.  Reputation is everything with gift card marketplaces.  Lots of cards and lots of traffic over lots of time means lots of business, because people generally trust them already.
  2. Pay attention to your orders.  After you purchase a card, you should follow the messages from the site as to when the cards are expected to arrive.  The sites I’ve bought from send me an email when they’ve shipped the cards.  We make sure to watch our mail for the cards.
  3. Verify the balances on the cards ASAP.  The more quickly you report any problems with the card to the website, the more helpful they’ll be.
  4. Keep records of the purchase.  If something goes south, you’ll have evidence that you didn’t buy the cards in a dark alley on the wrong side of town.
  5. Buy only the physical cards that you plan to spend soon.  Holding gift cards for a long time isn’t good practice anyway!  Ideally you should plan to spend the cards before the return guarantee expires for those cards.  You want to be covered in case the seller digs up the number for the card and spends it down somehow before you do.
  6. Plan on spending electronic gift codes immediately.  Electronic codes are far easier to spend after they’re sold than physical cards.  Also, electronic codes don’t carry the same level of guarantee from the discount sites that physical cards do.  But, it’s also easier for the buyer to spend them, so there you go!
  7. If a website offers warnings about transferring balances to store cards, listen to them.  They have likely had above-average issues with some retailers canceling customers’ accounts and draining card balances when the card is suspected or reported stolen.  They don’t want to have to cover any more losses than they have to; it’s not fun for the hapless buyer, either.
  8. Keep things at a simmer.  This means not loading up on big cards.  It also means not getting a whole ton of little ones, because using up three or more cards in one purchase could arouse suspicion.
  9. Above all, use common sense.  I know that Walmart cards don’t go for much more than a few percent off of face value.  A website offering them at 30% off is a huge red flag.  If it looks too good to be true, it probably is.

How has your experience been with discounted gift cards?  If you use them, how do you use them safely?