What exactly is freebie trading?
Freebie trading, also called incentive marketing, uses hundreds of websites called "Incentivized Freebie Websites" (IFWs). IFWs present trial offers from hundreds of companies that pay the IFW site commissions to advertise their products and services. The IFWs provide an incentive (cash or prizes) to people for signing up for the trial offers and getting a certain number of referrals to do the same. Types of prizes include playstations, Xbox360s, computers, TVs, and CASH. The types of prizes and cash amounts vary depending on the particular IFW site. The term 'freebie trading' loosely refers to the process of 2 people referring each other to their respective sites, or the process of paying someone to be a referral as described below.
How does it work?
IFWs get paid the commission from their sponsors on every person that signs up and completes the sponsor's trial offer. For instance say Blockbuster uses an IFW to advertise their offer for a 14 day free trial for a service to get movies delivered to you through the mail. If you like the service, after 14 days you get billed each month at the regular price. If you don't like the service, you can cancel before the 14 day trial period has expired, and that ends your subscription to blockbuster's service.
However, since you signed up through the IFW, you are credited on the IFW which qualifies you to send referrals to the site and collect the prize.
Blockbuster is just an example, not all offers are for a free trial period for their products or services. Some just require you to pay a small amount for shipping and handling, others charge a small fee. Even though many of the offers cost a little money, it is much less than the money you will make by completing the offer.
How do you make money by completing the offer?
Freebie traders pay you to complete offers! Completing a site's offer requirements to gain a credit is known in the freebie trading world as 'going green', or 'greening'. If you sign up for an IFW site via another trader's referral link and complete that site's offer requirements for a credit, you 'went green' or 'greened' for that trader.
Typically, traders will pay you between $20 and $150 for 'going green' depending on the difficulty of the site's offer requirements and corresponding prize value. 50% of the per referral prize value is considered the fair standard, and you should never accept less than that. Many traders will pay more than 50% for higher value sites.
How can a trader afford to pay you more than you spend on completing the site's offers?
It works like this:
Once you complete the required number of offers (go green) on an IFW, the site is "yours", and it gives you a referral link that you can use to refer other people. You have qualified, and now all you have to do is get enough referrals to sign up (through your referral link) on the site and complete the required offers or 'go green' (just like you did), and you can collect the prize.
Lets say the prize you picked was in the form of $120 in PayPal cash (a typical cash prize), the IFW says you have to get 3 referrals to receive the prize. If you think about it, they are basically paying you $40 per referral at that point. You could pay 3 people $20 each to complete the site's offers (go green), and still pocket $60 in cash. The thing that makes this system work so well is that after you get the 3 referrals and collect the $120, you can get another 3 referrals and get another $120... over and over again, forever... without having to complete any more offers yourself.
Starting to make sense?
What's in it for them?
At this point it may seem like either the IFWs sponsors must be paying out a lot more in commissions than they are receiving from the trial offers, or the IFW is losing more on prizes than they are making in commissions. Money has to come from somewhere right? Where are the IFWs and their sponsors making their money?
Well it turns out to be very profitable for them for a couple of reasons. First, a lot of people end up deciding that they like the offer and continue using the product or service (or forget to cancel). The more people using a product, the more word of mouth advertising that product gets. The system also relies to a certain extent on the concept of 'breakage'.
Breakage occurs when someone signs up to an IFW site, starts the process of completing offers, gets part way through and then quits or otherwise fails to meet the requirements necessary to claim the prize (such as not getting enough referrals). The IFW site still gets its commission on the products or services the person did sign up for, but never has to pay out any prize. Amazingly, it's a win/win/win situation most of the time.
There are many sites that capitalize on the concept of breakage and make it almost impossible to complete the offer requirements. But, a reputable, referral based IFW site is not like that at all... the offers are straightforward, it only takes a few offers to complete the requirements, and there are no 'offers of doom' that you find out about only after getting through most of the requirements.