People like free things. We see this concept everywhere, e.g., "free appetizer with a regular priced dinner"..."we'll give you the widget for free - just pay for the (over-inflated) shipping & handling".
Another study compared selling a product with discounts vs. BOGO (Buy One, Get One):
1) Buy Item X at 50% Off
2) Buy Item X at Half Off
3) Buy One, Get One Free
“Buy One, Get One Free” (even at full price) will, invariably, have the best buyer response. In fact, I've seen some unscrupulous supermarkets double the regular price on items for "Buy One get One Free" sales. Why does it work even in such cases? This is because, while we believe we are rational creatures, we also buy based on emotion and instincts.
I’m been studying the fascinating work of Professor Dan Ariely who was the professor of psychology and behavioral economics at Duke and now at MIT. Dan gave the above example and the free product with the $5.00 shipping cost had the best conversion rate. His book, Predictably Irrational, devoted a chapter to “The Cost of Zero” which is summarized in his talk below.