TIP #5: Sample Your Way To Success

The world’s oldest marketing method still works. Since the dawn of time one of the best marketing tactics has been the free sample. Can’t you just imagine the caveman giving a sample of his latest kill in hopes to find someone willing to exchange it for wheat?

In many cases sampling is one of the least expensive ways of acquiring new customers.

The Ultimate Expression of Confidence
If you were trying to sell candy bars that tasted like dirt you probably wouldn’t offer a free sample. When you offer something for sample you are expressing confidence in your product and its almost impossible for someone to turn you down.

The Law of Reciprocity
When you give something to someone for free you set in motion the law of reciprocity. If someone accepts your free sample they feel obligated to spend a short period of time to let you explain the gift you gave them. Always be ready with your elevator pitch because you just earned the right to use it!

Uncle Sam Helps Cover the Cost
When you give away a sample you are eligible to deduct 100% of the cost of that sample as long as you document it properly.

EXAMPLE
You purchase $100 of product to give away as samples. If you give it all away and document it property then you get a $100 deduction. That means you lower your “reported” income that you have to pay taxes on by $100. So let’s assume you are in the 35% tax bracket (average for most people). You would save $100 x 35% = $35 in cash on your taxes at the end of the year.

Show Me the Proof
In order to deduct the cost of samples you are required by the IRS to record in a tax diary or journal a couple of key pieces of information:

EXAMPLE

1. Who you gave the sample to … Judy Jones
2. What the product was that you gave away … Widget XYZ sample
3. Where you gave it away … Big Tradeshow
4. How much that product cost you (not retail) … $5.00
5. The date you gave it away … 10/18/2014
   

Taxbot Makes It Easy: With Taxbot you can do this all from your smartphone. Simply add an expense category called “Samples” and then fill out the information. If you have the original receipt from when you purchased the samples, take a picture of that receipt and store it as your proof of the cost.

If you don’t have the receipt, try to take a picture of the products you are giving away as the proof.

Sampling Helps Prove You Are Not a Hobby
If you have documented proof that you are always giving out samples it will prove to the IRS that you are working on your business. You are proving to the IRS that you are trying to make money. For more about why this is important check out our article on Business vs. Hobby on www.taxbot.com.

Give Your Love Away
The bottom line is that investing in samples makes good economic sense. If you love your products so will other people. So give them the opportunity to try them. It’s been working for thousands of years and it will work for you too! Just make sure you document it so you get the tax savings that come with it!