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The good and the gratis

- A value aspect on free goods and services

by

Catrin Davidson

Denum Nimanthi Abeysekera

Master Thesis 15 ECTS

Institution of Business and Economics

Tutor: Andrea Fried

2011-02-27

ISRN: LIU-IEI-FIL-A--11/00948—SE

Title: (eng) The good and the gratis - A value aspect on free goods and services

(swe) Varor och värde – Att se med värde på gratis varor och tjänster

Authors: Catrin Davidson and Denum Nimanthi Abeysekera

Supervisor: Andrea Fried

Background: Thanks to the Internet, the consumers have access to a world of information

and can easily compare the goods and services of one supplier to the other, and so be a part of

the value creating process (Grönroos 2002). Price is still key, but since producers are already

pushing their costs to the limit, what Chris Anderson (www.wired.com) calls the “race to the

bottom” they have to compete in other manners, meaning they have to dive deeper than lowest

of prices. However these free goods and services must have a value even though they do not

have a price tag attached. There are two ways to look at value; the altruistic and the normal

one. The latter induces the normal supply-demand ratio, where demand increases so does

price, and vice versa. The first one however is defined as the unselfish way to concern for

others, or more simply, the opposite of selfishness (www.ne.se). If translated it means that

people or companies actually can give things away for free, without the intention of making

an economic profit. Thus we see that a value measure outside the economic monetary one is

needed.

Aim: The aim of this thesis is to add knowledge to the area of Freeconomics by adding a

consumer value point of view. This is because we feel there is a lack of consumer aspect in

these entirely new business models.

Definitions: Freeconomics is the umbrella term that Chris Anderson coined for a number of

business models based on making money by giving things away for free....