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Time Is Money - How to Avoid Working for Free

Thursday, January 10, 2013   By Mike Reddy

 

It might be part of your marketing strategy to offer free services, discounts and other ploys that are aimed at building a customer base.

These strategies are often time consuming and with little tangible profit.

While it's natural to employ a few of them to stimulate activity, you should realise that success and profits won't come from giving your time or products away for free unless it is part of a specific planned strategy.

Time is money, so if your customer isn't paying for your time then ultimately you are.

When attracting new customers, sometimes a little extra incentive is required. Instead of offering free services, consider an alternative strategy such as a "Satisfaction Guaranteed" policy, where customers only pay if they are one hundred percent satisfied.

Be wary of granting favours and always bear in mind that, despite your customer's expectations, there is no such thing as a five minute job.

Create a thorough portfolio of products or projects that is easily presentable to clientele. The more impressive and comprehensive the portfolio, the less likely it is that the customer will require a free sample.

Don't begin work on projects until contracts have been signed, purchase orders complete or authorisations made. A professionally run organisation wouldn't even consider commencing work until the i's are dotted and the t's are crossed.

You must be comfortable that your customer will be able to honour their side of the agreement. This includes making payment. Be discreet in this process, digging too deep or too soon in the negotiation can scare off a potential customer.

There are three situations in which working for free may be beneficial in the long run:

  1. Working pro bono can improve your reputation and gain valuable referrals.
  2. Work that strengthens your portfolio while showing a strong return on investment.
  3. To cement a customer relationship that promises consistent and well paying work.

There is a real danger in offering discounted products and services. Unpaid tasks (or any products and services supplied at below market value) can subconsciously resulting in you creating subpar quality products or services and damaging your brand.

Remember, the outside world will never hear about the great rate you are offering!

To work effectively as a strategy it's important that the game plan is clearly understood. We have a great process that can help analyse the best ways to make your business more profitable. Ask us about how Advisapedia can help.


Mike Reddy is a Chartered Accountant, business coach and advisor helping businesses in Sydney, Melbourne, Brisbane and Gold Coast to easily increase their profits and cash flow. He is currently President of the North Sydney Chamber of Commerce, a Regional Councillor for Sydney North East and a member of the Institute of Chartered Accountants Sydney leadership team. As well as advising businesses, Mike presents business development seminars and webinars and is regularly contacted by the media to comment on small business matters. You can connect with him on Facebook, Twitter and Google+.