“If we’re going to get paid nothing. Let us choose what we do with our time. Is it this?” I said this! To my business partner. About 8 years ago. I’ve changed my tune over the years. I’ve realised this is not a black and white scenario. There are a lot of grey areas. When is it ok to work for free or less money?
When I made the above statement, we weren’t earning a huge amount of money. We definitely had capacity. But in my defence, my thinking was along the lines of; by giving them a discounted rate now, would they expect this to be the norm moving forward? I never found out.
But let’s look at this objectively. Because I have no doubt, you have found yourself in a similar situation more than once. This is where you must weigh up your options – the income-value scale. The income-value scale is the method I use now to evaluate free or discounted work. I ask myself (or the people I’m working with) these five questions:
1. Is earning some money better than earning no money at all?
Of course, this would be in the case of a discount – not a freebie. Do you have the capacity to take this work on? If you have no capacity, you’re in a much stronger position to negotiate or walk away. Then it’s a no brainer. But which is better working and earning some money or Netflix and nothing? The choice is yours.
2. Will the work be good for your mental health?
This can be a bit tricky because you might end up resenting work that you’re not being paid your full price for. But on the flip side, staying in “work mode” might help you keep a good momentum going. You know the old adage: ask a busy person to do something. The more you have to do, the more you’re able to do and all that. Slipping into Netflix mode can be equally as dangerous.
3. High or low maintenance?
Let’s be honest. Some clients are easy. Some aren’t. Some are good payers. Some aren’t. I take these things into consideration on the income-value scale. This has a big impact on the actual amount of time you spend on a project. It can also affect your state of mind (see point 2 above). If you’ve never worked with a client before this can be difficult to gauge. But you’ll get a sense during the initial discussions and quoting or proposal process. If the client asking for a discount has a history of high maintenance and bad paying, it’s no go for me.
4. What are the benefits?
This is an important question when especially when you’re asked to work for free. Let’s use TEDx Talks as an example. Not only do you not get paid. But you must apply. And people do. In abundance. Why? Because it’s a great brand to be associated with. The kudos you get for doing the talk are worth it.
It might be the same scenario for a particular client. It might be really great work that you can use for a case study to get other clients. Think about asking for non-financial benefits, like a testimonial or some PR. Get creative with these types of negotiations. TEDx Talks get a fantastic video and you get featured on their website.
5. What are your long-term options with this client?
Long term, you have a choice. My biggest fear was that this client would never pay us what we were worth. Maybe this is true but that doesn’t mean there aren’t options. Can you use another cheaper resource to do the work? Maybe outsourcing will reduce costs? Can you negotiate and up the price? You also have the option to walk away if all else fails and there is no further value.
As a business owner, you’re responsible for the decisions you make. Choose wisely. Choose slowly. Choose objectively. If you don’t feel you can be those things, get a second and trusted opinion.