Should You Have a Friends and Family Discount?
For some reason, many business owners feel internal (not external) pressure to give discounts to their friends and family, especially when they are first starting out and testing the waters of their fledgling business. Do any of the following sound familiar?
- You feel guilty charging your friends your real price, because your work ain’t cheap.
- You lack confidence presenting your real price to others because you don’t know how they will react.
- You want to give your friends a deal, because you know what they would have to pay if they hired someone else.
- You are afraid to charge what you are really worth because you have trouble believing you are worth it. (Real talk, y’all.)
On this topic, I speak as a person that has been down this road, repeatedly. In my early days of freelancing as a consultant I massively underpriced my services because I felt awkward charging my full rate to the only clients I had — my friends. This led to frustration on my part; but even worse than that, I permanently depressed my value in the eyes of a few key people.
So, should you give a friends and family discount?
(Hopefully you can see where this is headed.)
Almost always, no.
Don’t Give Discounts to Your Friends
Giving your friends a cost break is like eating cotton candy: it provides the short term satisfaction of making you feel like a nice person and making them feel like they are getting a deal. It also, in some cases, can lead to a short term spike in revenue (after all, that’s what discounts are for). But, like eating a handful of fluffy sugar, there are long-term implications that you may not have considered.
You de-value your offering.
Price is the biggest indicator to your prospects of the value of your product or service. Simply put, if you want to be taken seriously, you can’t charge an amateurish price. Giving someone a discount just to be nice reduces the perceived value of your work. You want your clients — all of them — to be totally on-board and bought-in to your work, and willing to pay accordingly.
You miss out on an opportunity for market validation.
The experience of charging a real client your real price is absolutely essential to building your confidence as an entrepreneur. If you discount your work, it doesn’t provide the real-world validation and feedback that you need to keep building your business.
I was talking to a friend of mine who was getting push-back from a prospective client on the cost of her health coaching programs. The push-back was causing her to feel insecure about her pricing, but that insecurity was primarily driven by the fact that she had only ever sold her services at a discounted rate. She had never experienced what it feels like to sell her work for her true, market rate. Her steep friends and family discount, intended to help build her business faster, was holding her back in confidently presenting her pricing to new clients.
You risk damaging your relationships.
For many of you, especially those who just starting out, all of your leads and prospects are going to be either friends or friends-of-friends. If you give a relationship-based discount, you risk hurting someone’s feelings if they don’t get the same discount that they know you gave to someone else. On the flip side, if you do professional work for someone as a favor for less than what you are really worth, you are creating the potential that you will feel bitterness and resentment toward them as a result.
You’ll notice that the above implications are specific to giving discounts to your friends. Personally, I think that family is a bit different. I’ve given discounts to family members in the range of 10 to 25 percent without experiencing any of the above implications. But, even with family, you need to consider the risks before you move forward with a family discount.
So, what do you actually do when your friend approaches you about working together?
Are They Your Target Customer?
Before anything else, ask yourself if they are your target customer.
You need to embrace the fact that just because someone is your friend, it doesn't necessarily mean that they are your target customer. And that’s ok. No one is holding a gun to your head or forcing you to do work that isn’t in your wheelhouse.
If Yes, Plow Ahead
If a friend comes to you that is a target customer, and the work sounds like it is in your wheelhouse, then plow ahead as if you were working with a complete stranger. If they fit the profile of your target customer, then chances are they will value your work enough to pay real money for it.
Some of the most rewarding projects I have ever done were with friends — for my full rate. I made money, they got good work, and we both got the satisfaction of collaborating with a friend.
If No, Be an Advisor
My husband, Travis, is a lawyer. When our friends have a question about the law or find themselves in a bind, they will call him first. These phone calls almost never result in him doing legal work for our friends. However, because of his experience, he can give them an overview of the different options that they have and point them in the direction of the best solution for their situation.
When people come to you with their creative needs, don’t assume that they expect you to personally address whatever issue they are having. Position yourself as their advisor, giving them an overview of the different options that they have and the pros and cons (and cost) of each. You can explain why what you do isn’t a good fit for what they need. If you are wrong for what they need, you aren’t a jerk for turning them away — you are doing them a favor.
Build Your Confidence
Now that you know to take discounts out of your repertoire, it leaves us back where we started: many of us lack confidence when presenting pricing. The good news is that confidence can be built with a bit of time and a bit of practice.
Practice saying your pricing out loud when you are at home or in the car. Practice in the mirror (no, seriously), with a friend, or a trusted peer so that when you are in a game-time situation, you will feel more comfortable. Every time you bring in a new client — at your real rate — feel your confidence grow.
You’ve got this.
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