Billing 101: Should You Work for Free When You’re Starting Out?

January 13th, 2010 Posted in Various

The hardest part of starting any service business, particularly an online service business, is the first few months. They’re the months when the most adjustment takes place, the most active marketing occurs, and the most important decisions get made.

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One of those important decisions is how you’re going to market yourself. As a designer, or any type of service-based freelancer, it’s very difficult to effectively market your business without a portfolio, testimonials, or some sort of track record. Internet entrepreneurs are understandably hesitant to go with a provider that’s not well established, making it difficult for new service providers to find an audience early on.

There seem to be two schools of thought when it comes to pricing yourself as a new provider. Some people say to do exactly as you should otherwise – price as if you were getting hundreds of projects from clients already. Unfortunately, while this may be a great strategy for gaining the occasional client or two, it’s a very difficult strategy for generating clients when you’re short on visible results and experience.

The other strategy is to price yourself so low, sometimes even free, that clients have no qualms about testing your services. As the price is so low, there’s almost no risk for the client should things not go as planned. The low price draws in clients interesting in experimenting with new and different providers, while the projects, despite being poorly paid, still bring in experience, information, and valuable portfolio items for your business.

There’s a second advantage of the free method, beyond the portfolio items and valuable design experience. As you gain clients at a low price, you also gain a group of clients to market to in the future at a higher rate. It’s the same philosophy that email marketers take when they capture leads; instead of securing the instant sale, they capture email addresses and hold out for the much larger future sale. Building relationships counts for a lot, especially online, so creating a resource of potential future clients is often worth the small time expense of taking on low-priced projects.

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There’s another type of free work that’s become quite popular – or unpopular, depending on your outlook – in the design community. Spec work is quite frequent, and it’s a constant point of argument between designers and clients. Spec work is essentially unpaid work, similar to a competition, where a large group of designers are invited to submit their designs and only a select few end up getting paid.

Naturally, the design community has reacted to spec work quite negatively. While spec work is occasionally worthwhile for boosting your portfolio size and gaining design experience, as a marketing strategy it fails horribly. The major value in free work is that it builds your design network size; adding to your portfolio is just a bonus. Does entering an on-spec competition increase your network size in any way? If the answer is no, it’s probably not worth the time.

Once You’ve Got the Clients, How Do You Market to Them?

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This is where most newbie designers freak out. They’ve hooked the clients, performed great work for them, and want to get paid more for their future work. The only problem is that they’re completely feared to ask, fearful of losing their current clients, and even more scared of potentially getting a negative reputation for demanding a sudden price hike.

How can you prevent that from happening? Be open and honest with your clients. Rather than having them think they’re getting a standard rate from the start and suddenly raising prices on them, let them know right from the beginning that you’re offering a highly discounted rate to gain new clients. That way, when you raise prices later on (with plenty of warning for your clients, of course) they’ll react positively, knowing that they’ve got an exclusive discount that few others have.

The difference between ‘raising prices’ and ‘finishing your discount’ is what makes this strategy work. Frame the change as a return to normalcy, not a price increase. If you’re still worried about losing long-term clients, introduce a slight price change for current clients, and simply market yourself at a higher rate to new clients and on public advertisements.

Hopefully these pricing strategies and ideas help you gain clients and design experience. We’ve all been new designers at one point, and all know how stressful and difficult the first few months can be. While it’s never fun to work for next to nothing, it can be a great long-term marketing strategy when implemented right. Just remember, keep things open and clear from the beginning, focus on value-adding design work, and switch to your long-term prices gradually.

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who has written 30 posts on [Re]Encoded.com.


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6 Responses to “Billing 101: Should You Work for Free When You’re Starting Out?”

  1. Mary Lewis - MaryDesigns Says:

    Well said Mathew! Thanks for taking the time to talk about this!


  2. Gary Says:

    Nice article Matt. Why do you have to mention your age in your author intro?


  3. acepek Says:

    Good advice. While working for free is not fun, it gives you a chance to prove that you’re the big bucks.


  4. Mathew Says:

    @Mary – no worries and thanks for the comment.

    @Gary – I guess it gives you a perspective that appeals to new designers and young entrepreneurs. Also, thanks for your comment.

    @acepek – thanks for the comments 🙂


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