Many of us give away samples, or offer free consultations or other cost-free offers to entice and motivate our clients or customers. This can be an incredibly effective way to market our products or services. But, how do we know if we are giving away too much? Perhaps we are offering things for free that are actually hurting our bottom line and we should cut back or curb our free giveaways for the benefit of our business?
Of course, looking at your profit and loss statements or overall budget is one way to at least get a handle on how much your free products and services are costing your business. This can provide one way of evaluating the role and effect that free giveaways have on your home business. BUT, it is also important to look at the long-term effects. For example, if giving a free initial consultation pays off more long-term customers, then it surely needs to be considered a valid business practice. However, if there does not seem to be a direct correlation between the freebies and paying clients—it is time to reevaluate the practice.
Also, consider how you are “training” your customers or clients. If you are training them to expect freebies and free products and services, they will not feel like they should be paying you a reasonable price or compensation. This can be a real problem for the healthy of your business. Giving away too much leads others to devalue your time. You may expect that they will eventually WANT to pay you for your great products and excellent services—but, often, unless you insist and demand reasonable payment, it will not be offered or forthcoming. If you have spent a very long time offering things for free, customers and clients might actually get offended and take their business elsewhere.
Finally, look at what is happening in your field. Is it standard for free extras, consultations, products, or services to be provided? There are many fields of business where this is customary and you need to have freebies be part of your business operations in order to compete. However, if you are giving away far more than others in your field, this may create an initial advantage for your business, but in the long run it can hurt your profitability.
See Also: Should You Formally Guarantee Your Products or Services?