When Should I Charge for My Services?
This is a question I hear often from entrepreneurs who are just starting out or people with specialized degrees who want to help their friend's businesses. Charging people money for your services can be a very big accomplishment for some, and it's a milestone that should not be taken lightly. Today, we are going to talk about three important considerations when making the decision of whether or not to restrict your business to a paid service, and you will find out why I don't charge people as often as you think.
Consideration #1 - Is Charging a Necessity?
If you need the money to survive, there's no way around it, you need to be charging people for your time that you would otherwise need to spend working a job to cover your expenses. However, there can still be times when you are providing free services once your needs have been met (either from an unrelated job, or a set of regular customers). You could have a standard package or service that you provide to your regular customers and have a separate smaller arrangement with some friends who need quick insights or help that would be difficult to charge for anyways. It’s also important to remember that if someone is asking you for your services for free and can’t provide anything meaningful in return (like an extended relationship or referral as described below), you should charge for the time.
Consideration #2 - Can The Other Party Afford it?
If you are fortunate enough to not need the money from a particular job, and not charging for that job wouldn't ruin your relationships with other customers or friends, you should consider if the bill would significantly impact the other person's finances and growth trajectory. This is a situation I find myself in all the time, where I provide free financial advice and business consulting to my friends expecting nothing back in the short term. I know that if I charged my regular $200+ hourly rate for the time I spent helping them, they simply could not afford it. They would either never come back to me (potentially ruining a relationship) or not have the capital to continue growing their business. The important thing to remember in these situations is that when the constraining resources money, time and Goodwill are on your side.
If I help someone out today by providing free services, their business can grow faster and they will get to the point where they stabilize and can afford me sooner. On top of that, being one of the supporters of a growing business in its early stages will help build a relationship that can be far more valuable than the few hundred dollars you would have charged otherwise.
Some of you might realize that you could be in the same situation they are in. Take me as an example: in my free time I love using the knowledge I've gained in the professional world to help my friends, their business ventures, and people like you (my lovely reader) succeed. I'm not at a point where I want to throw more money at this website because I have other commitments. At the same time, I could really benefit from someone helping me with social media, community management, or generating ideas for content. If any of the friends that I'm helping have these skills, I am going to pick their brain and ask for their help in the same way that I am helping them, with their time. In an ideal world, the support we provide each other helps us become successful and able to be paid by enough people to the point where we can just pay each other.
Consideration #3 - Referrals
While not necessarily exclusive to free services, referrals are a very valuable way to grow your own presents and continue doing what you're doing. In my experience, the people that I provide free services to didn't really understand what I could do for them as a CPA or a business advisor. By taking the time to talk with them and share my insights and background, I have created a node in my network that has a good understanding of what I can help with and is hopefully willing to spread the word about me. As the saying goes, "your network is your net worth", and taking a small amount of time to help a few people for free can get you connected with your first big customer.
In summary:
You should only provide free services when you can afford to (when you have your necessities covered), otherwise you should be spending that time working to get paid.
If the other party can't afford you, it may be worth your time to provide free services where you can in exchange for their help with something you need and a longer-term relationship.
By supporting others who would otherwise not know what you do, you create a referral point in your network that can spread the word about you.
If you are someone who provides a valuable service or insights, remember these points because while getting paid now is great, having a network of successful and grateful friends can be far more beneficial in the long run. Ultimately, the cost-benefit analysis is something that you need to assess yourself, and these considerations are a great place to start. Good luck!