Free vs Paid Offers – 6 Crucial Factors That Dictate Whether You Need a FREE or PAID offer to sell your products via Facebook Ads

free vs paid offer

I once heard a business coach tell their students you must never run Facebook ads directly to a paid offer. And that lead gen campaigns promoting freebies like…

  • Lead magnets…
  • Free challenges…
  • Free quizzes…
  • Webinars…
  • Video series…
  • Free trials…
  • etc…

…are the only offers that convert on Facebook. 

This is 100% NOT TRUE. 

However, if you want to profitably run cold traffic Facebook ads straight to a paid offer, you need to know when it’s possible to make them work. 

Which is why I’m going to walk you through 6 of the most important considerations you need to think about – before deciding whether a direct-to-paid-offer funnel…or a lead gen funnel is the best choice for you.

1) How much can you afford to spend to acquire a customer?

No matter what you sell on Facebook, one of the first questions you must answer is – how much can you afford to spend to acquire a new customer. Here’s why that’s important.

It costs way more to acquire a paying customer than it does to acquire a lead. And some Facebook advertisers simply don’t have a high enough daily budget to allow them to generate even 1 sale per day.

If that’s the case, it’s practically impossible for Facebook to optimise your campaigns – and you’ll probably end up throwing your entire ad budget down the toilet…without making a single sale. 

So ask yourself this…

Can I afford to spend 3 x my average cost per purchase per day (per campaign for CBO campaigns, or per ad set for ABO campaigns)? If the answer is ‘no’ – then you’ll need to run ads to a FREE offer, where you may be able to acquire leads for as little as $3 a pop. 

2) Is it possible for you to break-even within your desired timeframe?

For the sake of this article, I’m going to assume you want to break-even on your ad spend within 0-10 days of a prospect seeing your ads. 

Which means you need your average front-end order value (i.e. the average amount a new customer spends on your products after interacting with your ads) to be more than or equal to the price you pay to acquire a customer. 

For example…

Let’s say it costs $40 for you to acquire a paying customer. You would need to sell an average of $40 worth of stuff to your new customers – during your first transaction – in order to break-even right away. 

Simple, right? 

But what if the average price point for your products is $5? You’ll lose $35 every time you make a sale. So, you either need to:

  • Create an appealing product bundle to raise your average order value
  • Add in some upsells and order bumps to raise your average order value
  • Quit running ads to your low-price offer and sell something more expensive 

OR

  • Find a cheaper way to acquire customers (which would normally mean running Facebook ads where you give something away for free).

In short, if you need your ads to break-even quickly…and if it’s looking impossible for you to break-even with your range of paid products – then you will need to switch strategy and run lead gen ads to a free product instead. 

3) Are you selling Physical Products…Services…SaaS…or Info?

In general infoproducts, services and SaaS products are more challenging to sell directly from a Facebook ad. That’s not to say it’s impossible. But you will need higher than average quality ads and landing pages to generate conversions – without offering something free first.

But if you’re selling EComm products – it can be much easier to generate sales directly from a Facebook ad. Here’s why.

Physical products are much easier for potential buyers to understand and visualise. Especially if you run ads with a clear product video or lifestyle images, which show the product in action. 

4) How complex is your paid product?

The dream for any advertiser is to run a single ad and generate a sale immediately. But let’s be real for a second. That rarely happens in advertising. Why?

Because humans need time to weigh up the pros and cons of buying before they make a purchasing decision. And it’s rare that they’ll make a decision the instant they see a Facebook ad.

This is especially true if your business sells more complex products like courses, B2B services or software. That’s because your prospect is likely to have 100s of questions and objections they need answering before they’re ready to buy. These could be questions like:

  • How does this product work?
  • Will this work for me?
  • Can I trust you?
  • What qualifies your business to help me?
  • Will I get real value for money?
  • What if I don’t like the product? 
  • And many other concerns!

It’s why infoproduct, service and SaaS sellers rarely run ads directly to a paid offer. And instead they run lead gen campaigns, which allow them to build a relationship – and answer objections over a period of days or weeks. 

So the general rule of thumb is this…

The more complex the product, the longer the decision-making process. Therefore the more free value you need to give before you ask for the sale. 

5) How expensive is your paid product?

Some people say it takes the same amount of effort to sell a low-ticket offer as it does to sell a high-ticket offer. Well, that’s not really the case. 

Which is why you’ll almost never see advertisers selling a £20,000 mastermind directly from a Facebook ad. But you will regularly see advertisers selling a £7 Ebook directly from a Facebook ad. 

The reason is simple. It’s a lot less risky for consumers to invest in a £7 product than it is to invest in a £20k product. And that’s why you must offer something free first, if your ultimate goal is to sell an expensive product.

6) What level of commitment are you asking your prospect to make?

Subscriptions and recurring revenue offers are the Holy Grail for most business owners. However these kinds of offers are tough to sell directly from a Facebook ad. That’s because you’re asking potential buyers to make a long-term commitment to you – when they’ve never met you before. 

Can you see why that would be almost impossible to achieve when advertising to a stone-cold audience? It’s why most recurring revenue offers come AFTER you’ve hooked qualified leads in with a free offer.

It’s also why you should ideally only run direct-to-paid-offer ad campaigns when selling low-commitment but high perceived value products to cold audiences

Often when advertisers ask questions like ‘should I run ads to paid or free offers’ they want a simple ‘yes’ or ‘no’ answer. But like most things in business, the answer is rarely as simple as…

Always run ads to paid offers 

Or

Always run ads to free offers

That’s because there are situations when one type of offer will make more sense than another. And so you shouldn’t dismiss any selling strategy – without thinking about:

  • Your ad budget 
  • Your breakeven point
  • The type of products you sell
  • The complexity of your product
  • The price of your product
  • The level of commitment you’re asking buyers to make 

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