Working for Exposure, and the "Friends and Family discount"

November 24, 2016
by
Mike Faga

I had a long chat with a friend this morning about her beginning a business. We discussed pricing models, workflow, and the dreaded conversation on having a "friends and family" discount.

I for one, advised her against having one. I currently don't offer any friends or family a discount. I have a few reasons why.

Most people when they hear that I charge my family (or even close friends) my full rate, they are stunned. "How could you charge them that much? You need to give them a discount." But whenever you ask them why, it's always the same answer: just... because!

I've never been a fan of doing something just because it's always been that way. If a friend of mine started a business, and asked me for their business, I would be happy to support them if I could. If it's a matter of money or budget, you shouldn't have to devalue your business just because they want a cheaper option.

Now, there are a few conditions. Maybe you have a special case where a family member really needs your services and just can't afford anyone else. It all depends, take what I say with a grain of salt. But all in all, if your family or friends want your services, they should also want you to succeed.

Imagine this scenario. You start a cupcake business out of your kitchen. You want to sell your cupcakes for weddings, and small events. You take great care in decorating them custom for each client. Here's a sample conversation between you and a cousin who just got engaged:

You: "I just started a cupcake business!"
Cousin: "That's wonderful! Jim (her fiancee) and I just got engaged and are looking for catering for our engagement party. Can you bake some for us?"
You: "Yes! I can put your names on them, with the date of the wedding! They'll be so cute and unique for you both."
Cousin: "Perfect. The party is this weekend, so bring about 50 so everyone can have one."
You: "Oh okay, here's the thing. I still work full time so can you help me out and pay for them?"
Cousin: "What about the friends and family discount? You'll be able to get great exposure and I will recommend you to all my friends at the party!"

Now you can see where this conversation ran into some issues. The new cupcake business will cost you time and money. You'll have to buy the supplies, take time out of your day to bake them, and design the icing. Not to mention that you're running this new business from your own kitchen. Can you cook your own food while you're baking cupcakes? No. At least charge them for the supplies!

Now here's the same conversation, but with a simple twist:

You: "I just started a cupcake business!"
Cousin: "That's wonderful! Jim (her fiancee) and I just got engaged and are looking for catering for our engagement party. Can you bake some for us?"
You: "Yes! I can put your names on them, with the date of the wedding! They'll be so cute and unique for you both."
Cousin: "Perfect. The party is this weekend, so bring about 50 so everyone can have one."
You: "Okay great! Once I get this business going, I want to be able to charge $4 per cupcake. This way I'm able to make some money off of my business after paying for supplies, and my time. So what we can do is $3 per cupcake since I'm just starting out, so you'll be looking at $150 for all of it."
Cousin: "That seems fair, not a problem! Thanks!"

To be honest, I just pulled these numbers out of my ass. I have no idea what I would price 50 cupcakes at without doing some research. Don't get mad if I grossly under/over priced them.

This is why you need to charge for friends and family. And sorry to burst your bubble, no one ever gets enough business from "free exposure" to make any free job worth it. Exposure doesn't pay for supplies or even time.

This doesn't mean that you charge a million dollars for your first sale (in this case, cupcakes) but it does mean that your time is still just as valuable.

One thing I like to tell my customers is when you start a business, is tell everyone what you want to charge. That way when you are working "for exposure" you have some room for discounting your work because you are building your portfolio. You'll still be able to profit, they will see the value of the discount, and you won't dig yourself in a hole for having a "friends and family discount."

Your cousin (or family/friend) should want you to succeed. If they scoff at your pricing and continue to ask for a freebie, they don't value your business. They value a family/friend that is willing to do something for free.

If it is a budget issue and they can't afford you, make sure that you aren't pricing yourself too high. Be sure to test your pricing out before you shoot down your family and friends. You don't want any bad press with the closest relationships in your life.