One of the hardest things about a home business is deciding what to charge your friends.
When you have a home business, especially one that offers services, it can be difficult to know when to draw the line. Are you helping a friend? Or have you been drawn into providing valuable services for insufficient compensation? It's easy to tell someone who is a relative stranger that they need to pay you more, or that you have higher rates. But when a friend asks for a little help, or a little discount, or even free services, it's hard to say no.
Because no one wants to get in a money confrontation with friends.
So far, I've been pretty lucky in terms of what I've been asked to do for friends. I had one friend ask me to look over a school essay for her, and I occasionally help relatives with their school papers. But it's not usually onerous, and it hasn't been much of a problem. And, even though I relax my rates in some cases, for very specific clients and in very specific cases, I haven't had the difficulty of trying to explain my rates to friends.
But what would happen if I did?
Do Your Friends Value What You Do in Your Home Business?
The inspiration for this post comes from someone I know. She confided to me that one of her friends occasionally asks her to watch the kids. My friend is was ok with occasionally taking the kids, but her friend recently told her that she needed to bring the kids over once a week, from 8 – 5:30. They didn't discuss payment, and my friend was reluctant to approach the subject with her friend.
I told her straight up: It's not fun, but you need to talk about it. Because of the following:
- You are expected to provide a regular service now.
- You are expected to be available for a set period of time each week.
- Your day is commandeered for that time period; you can't do anything else.
The most important point, though, is that she is being asked to provide a regular service for her friend. And her friend doesn't seem to value that. Yes, there are other ways to value things. Money isn't the be all and end all. At the very least, my friend's friend should offer to babysit in return. There needs to be some sort of compensation, otherwise you're getting into a situation where you have said that you?don't value your time and effort, either.
Before you provide services from your home business, think about what is being asked of you. Doing a favor on occasion isn't such a bad thing, and it can build good will. However, you don't want to be taken advantage of. And you don't want to end up in a situation where you don't have time to actually grow your home business.
What do you think? Would you provide free services to friends?
Miranda,
This is a tough but important decision, and not just for home-based business owners, but for all entrepreneurs. It’s tricky to figure out, even with customers, what products and services to discount or give away as a strategy for selling more valuable products and services down the line. The real question is, what does it do for your business? Does being known as a helpful friend in your community bring more paying clients your way or help establish your expertise? If so, perhaps there’s a benefit to helping out beyond just being a good neighbor.
That’s a good point, Heather! You do need to weigh the pros and cons of your decision. And some of them can mean more business. However, if you are just giving away your services, and not getting any benefit beyond the warm fuzzy, you do need to be carefully. It can quickly turn into a slippery slope that stresses you out and results in a difficult time for creating a profitable business.
One of my very close friends is an accountant and his rule of thumb is great. He does free tax returns for direct relatives (parents, siblings, and kids) and anyone that was in his wedding party. Everyone else has to pay…..a great place to draw the line and easy for people to understand….especially when they realize that he’s already giving away his services to a dozen people and can’t afford to let everyone have it for free.
That’s a great rule of thumb. At some point, you do have to draw the line, since if you did free work for everyone you know, you’d never have time to actually earn a living.