The FREE transaction
May 28, 2008
Most entrepreneurs can look back into the growth of their venture and can relate with doing work for free or what seemed like for free … if they’re anything like me, their past is strewn with uncounted hours donated to the pro-bono gods in hopes of gaining recognition, visibility or access to a great client pool.
Most efforts that fall into this ‘refinement’ process as a business owner aren’t looked upon with fondness or with a realization that it actually paid off … it rarely does without some forethought and planning.
One of the most challenging things to do when you are struggling to improve your client pool is to turn down work. We have all either heard or used the excuses before:
“We’re new at this, we need to come in lower than the more-experienced players.”
“They want us to work at a discounted rate … but it will provide us with some potential visibility with their clientèle.”
“He says he’ll give us 25% of the profits! We just need to work ‘with’ him to get it off the ground.”
The bottom line is, when you reduce your rate or pro-actively offer a discount for any of the reasons related to the above examples, it can greatly affect your brand. How? - You control how you and your company are perceived. If you tell people that you are aware that you shouldn’t be paid as much as your competition, then they’ll take you at your word and will expect to pay a reduced rate. Their level of trust can be diminished because you have set yourself up as not-as-experienced, no proven track record or potentially questionable results.
Misconceptions
Inexperience Means Less-Pay
I was talking with one the most talented illustrators I know a while back and throughout our conversation he kept discounting his offering based on his lack of experience in the marketplace. I explained to him that people weren’t going to hire him because of his business operations necessarily; the demand was placed upon his skill as an illustrator … and when it came to that, there was no visible difference between him and a 10-year veteran. In fact, the client wouldn’t know any different unless he was to bring it up!
Often, our inexperiences are viewed as ‘the telltale heart’; as loud and glaringly obvious to our clients as they seem to us. In truth, our clients want something done well, for a good price and on time; if you can hack it, your experience may be inconsequential. Your self-esteem plays a big role in how you portray your brand to your audience.
Divided We are Poor, Together we Make Money
I’ve started two companies in business incubators; places where you can get your company off the ground on a tighter budget; low rent, glorified cubicles, surrounded by other start-ups.
A common scenario is for another start-up to try and get your start-up to join forces and revel in the rewards of your dual effort. There are very few instances where this pays off.
After all, you should be working toward making a profit from your efforts, working for free toward someone else’s goal won’t further your cause.
How can this scenario succeed? Become a broker for their cause and vise versa. When you have the opportunity to push someone their way, do it; and make sure that both parties know who made the connection. The natural response will be to reciprocate by pushing opportunities your way. And if you find that the love isn’t being sent your way, move on. No harm done.
For the same amount of effort it would take to conjure up a single strategic partnership with another company or individual, you can make ten times the number of introductions that may end up in potential paying opportunities for those around you. The return on your investment is better, longer-lasting relationships and potential for them to return the favor.
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