The Cost of Free Doughnuts

I certainly see the point they are trying to convey, but this is a bad analogy.<p>The Red Cross receives funding through donations and/or government subsidies. The donuts really are not their core product, if anything they would be more akin to a retail 'loss leader'.<p>The average web startup only has one core product, at least it gets to the Facebook scale of having thread its way into multiple aspects of your life. These startups are only getting their money through venture investors, who most certainly do not view their checks as 'donations'. So, there is a basic requirement to transition from free to revenue generation in some fashion.<p>The troops most likely saw the donuts as a small token offering from the Red Cross, and also felt they had done something to earn these free donuts. While there is a lot of feelings of entitlement among some customers of free services, I think the bulk of the users understand the company has to make money <i>somehow</i>.<p>In many cases the 'freemium' model appears to work well, as long as the paid versions offer obvious value. I wouldn't recommend for most people to not offer some free version of the product, but I also wouldnt warn them against charging for their products via a story about Red Cross donuts.

This reminded me a lot of what happened to Netflix last year when they spun off the streaming service into its own $8/month product. Existing customers who were already receiving it for "free" were totally livid, despite the fact that people in Canada, who didn't have the DVD service, and could only buy the $8 streaming service had no problem at all.

If I remember correctly, one of Dan Ariely's first two books covers this kind of human behavior.<p><a href="https://en.wikipedia.org/wiki/Dan_Ariely#Books" rel="nofollow">https://en.wikipedia.org/wiki/Dan_Ariely#Books</a>

Well, I'm not sure if my emotional attachment to Google is comparable to that of wartime soldiers to free doughnuts. What's left is the fact that a free service is very different from a paid service, and that pulling the rug under your customers is going to leave them very disgruntled. I am not sure this is a novel insight. I guess the historical analogy is still neat.

Perhaps a way to prevent the reaction from a change in category is to discontinue and rebrand the product.<p>If the Red Cross had shut down the donut stations and then came back some time later with comfort food in a modified form, the soldiers would see the new stations independent of their anchor to the previously free stations.

This is why "underpromise, overdeliver" is so important in managing customers. People develop expectations very quickly, and then are delighted or disappointed depending on how things turn out relevant to their expectations.

"A lot of the online services you probably use are free. Gmail is free. Facebook is free. Yahoo News and NPR are free"<p>Are these services really free? We may not pay cash to use these services but we certainly are paying something.