Mahesh's blog
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Freebies are not free

Yes, freebies are not free. I think we all agree on it but this is reminder to apply same thinking across multiple places. When you think of buy 1 get 1 offers to buyers or political campaigns promising zero interest loans to voters, all these kind of offers in different flavors come at a cost. Cost which might not be evident at face of it but as you dig deeper, you might start noticing things that can cost us more than without any offer in the longer run. Let's think through this in three different scenarios and how freebies impact daily life.

Every day, we see offers from food to holiday packages and from apparel to groceries in newspapers, tv, local stores, and e-commerce sites. Among all, buy 1 get 1 or buy this item and get this other item are pretty popular or most people including me fall for it. It is obvious to buy because we are getting 2 products for 1 price and psychologically, good feeling having got a good deal :smiley:. But as more people buy this combo, there are multiple things we need to think about. First, we might be buying more than we initially plan to buy. Secondly, sellers can hike up the original price of 1 item to really high and maintain till the sale. So, those who buy outside the sale will end up paying almost double the price. In this way, we keep the prices really high most of the times for sake of offers.

Now, let's move to an office environment. Freebies are offered differently here in form of perks like in-house laundry, free food, late-night cab service etc. Though they are totally worthy perks for one-off scenarios, I think most of the times doesn't seem to be free. As an employee with these perks, we can easily spend more time in office one way or other which disturbs the work-life balance. And also these add additional costs to a company which in turn affect anyway employee's salaries.

Third but most impactful of all, freebies in politics to attract voters during political campaigns. Whatever is offered as free will use people's tax money in form or other in future to recover. This might be a short-term gain for some but they will be impacted as well in form of inflation. Take a simple example of giving as simple as cycle to appease voters. This needs upfront some money to at least make cycles and that means someone has to spend from their pockets. If these cycles are given away for free, whoever put the money has to get it back someway or else he will be poorer than before. So, if they win elections, they will try to recover through direct or indirect means. Because of free cycles in the market, there will be less demand in cycles and thereby increasing the cycle price for those who are planning to buy one.

Freebies are not economically viable to any problem in the longer term. It might give us a chance to try a product or service in the shorter term if we don't have better options but we will lose more in the long-term by paying more. To conclude, the intent of this post not to become suspicious at freebies but rather be curious to understand the long-term effects of any offer at any level in our daily lives by asking more questions.