The Truth About Doing Free Work: Why Everyone Loses

Read time: 3 minutes

On August 16, 2019, I handwrote a short post that became a cornerstone business principle.

The principle became “[Offer services for] Free or full price – nothing in between.”

Today, 4 years later, I’ve thrown that principle in the garbage.

Giving away your services for free (or even at a discount) is a flawed strategy — everyone loses.

What started as a seemingly logical principle turned out to be an oversight.

When people get things for free, they treat them as less valuable.

When they pay full price:

• They use them more

• They value them more

• They care about them more

And that is precisely the point.

When you pay for something, you treat it differently.

The flip side is true — when you get paid for something, you treat it differently.

You just don’t show up the same way either, which is why everyone loses.

Your goal as a business or brand is to be perceived and realized as valuable. Price impacts that value.

Let’s clarify a few points about free.

• I’m not talking about physical or digital products. These are time-leveraged, meaning the work was done upfront. Offering products for free or at a discount can be a viable strategy for attracting more volume.

   

• I’m not talking about “free from obligation” work. When you genuinely don’t expect anything in return, committed to doing good for humankind…and your soul.

   

• I’m not talking about experimenting for free. When you experiment, it’s for you to get value from the experience; it’s not really for the ones receiving the service.

I am talking about using free and discounts for your services as a strategy at the core of your business or brand.

Here’s why the price is right:

• Price is a filter that weeds out the wrong people

• Price is a lever that dictates the perceived value

• Price creates fairness (and prevents getting cheated)

In the game of services, you sell your time for money.

And no matter how you slice it, you have to value your time.

Price is a filter that weeds out the wrong people

Services are a two-way street.

Even the most concierge, “done-for-you” service demands some level of participation from the buyer. Free or discounted provides less incentive to get them to pay attention.

It’s easier for things to fall through the cracks — meetings get pushed, and time gets wasted. Price is the gatekeeper to ensure you direct resources toward the right customers (and save you from the wrong ones).

If they don’t have skin in the game – it’s not a great experience (for either party).

Price is a lever that dictates the perceived value

Price is the bet your customer is willing to risk for value.

But not all “value” is the same.

• People perceive value with price

• People realize value with delivery

This means the price is based on an expectation that you can deliver (the promise.

The higher the expectations, the higher the price.

Now you might argue that you can also overdeliver. But the promise sets the price, and delivery realizes the value. So, using an “underpromise and overdeliver” strategy means you’ve reduced the perceived value from the start.

And thus reduce your own price.

This is why “underpromising and overdelivering” is not associated with high prices.

Instead, promise as much as you can and deliver on the promise.

Price creates fairness (and prevents people from getting cheated)

Full price allows everyone to say “yes or no” to the same terms.

Offering free or discounted services cheats the person who already paid full price. And what gives me the right to charge one person and not another?

Besides, I’d be cheating myself too.

Price levels the playing field.

The principle is no longer “[Offer services for] Free or full price – nothing in between.”

It’s now:

Offer full price for your services – it's a strategic filter, value lever, and it creates fairness.

Thank you for reading.

Peter

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