There is folk wisdom which goes along the lines of “it’s worth whatever you paid for it” but it is becoming rather irrelevant nowadays. Look at the tech scene. Consumer-oriented services (Google, Facebook, Twitter, Flickr, etc.) do not charge their customers directly, they all find other ways to make money. Their services are “free” (yes, I know, we can discuss whether they are actually free and are you a product or a customer, but that’s another topic) and yet clearly recognized as very valuable. Even if they do charge directly, they almost always offer a generous free tasting that is sufficient for many uses (Evernote, Dropbox, etc.)
The point is ease of trying. Testing a free service only costs you your time and so is easy and tempting to do. In particular, you don’t need to trust that service very much because, again, all you are risking is your time. On the other hand, charging $200/hour is going to make most (but not all) people require some proof of the value before they part with the cash. A paid service needs more trust.
I understand that some people interpret price as signaling quality. But there are other factors in play, too.
There is folk wisdom which goes along the lines of “it’s worth whatever you paid for it” but it is becoming rather irrelevant nowadays. Look at the tech scene. Consumer-oriented services (Google, Facebook, Twitter, Flickr, etc.) do not charge their customers directly, they all find other ways to make money. Their services are “free” (yes, I know, we can discuss whether they are actually free and are you a product or a customer, but that’s another topic) and yet clearly recognized as very valuable. Even if they do charge directly, they almost always offer a generous free tasting that is sufficient for many uses (Evernote, Dropbox, etc.)
The point is ease of trying. Testing a free service only costs you your time and so is easy and tempting to do. In particular, you don’t need to trust that service very much because, again, all you are risking is your time. On the other hand, charging $200/hour is going to make most (but not all) people require some proof of the value before they part with the cash. A paid service needs more trust.
I understand that some people interpret price as signaling quality. But there are other factors in play, too.