Running A Business

How to Offer Free Services and Still Make Money

Feb 07, 2020 • 7 min read
Business owner sampling free product
Table of Contents

      You opened a business to make money, not to give things away for free. However, sometimes offering free services can bolster your business. The key to having free services work for and not against you is understanding the right way to go about it. To help you navigate these murky waters, we’re outlining some essential dos and don’ts of offering free services. 

      When to offer free services.

      Free services: You gotta know when to hold ‘em and when to fold ‘em. Ultimately, you’ll need to review the unique costs and benefits for your business, but here are some of the best reasons to offer free services. 

      If it’s something that doesn’t cost you anything.

      There are certain cases where offering a product or service for free comes at no additional cost to the business. This is often the case in audience-based businesses. If you have a seat that would otherwise be left empty, you’re paying the cost of that seat whether or not a customer occupies it. Theater, seminar, or web-based classes are prime examples where offering a free slot may benefit your business if it means building word of mouth. If any part of your business is “set it and forget it,” this option could be great for you. 

      Deciding if this applies to your business will depend on your industry. While there may be empty tables in a restaurant, allowing patrons to sit down for a free dinner comes with the costs of the food and beverage the customers would consume— not to mention the additional labor associated with accommodating them. 

      If you can transition them to a paid user down the road.

      This strategy is a common approach to offering free services. We see it everywhere from a Disney+ trial subscription to credit cards that waive APR or an annual fee for new customers. The theory behind these introductory offers is that you can show the customer how baller your business/product is. Once the offer is over, they’ll be hooked. Think of the introductory offer as a salesperson closing the deal for you. 

      If you can offer a pared-down version of your paid product.

      You may have been reading this article thinking, “Wait a second, Lendio offers free accounting. Where does that fit in?” Right here, and we’re telling you because transparency is an essential element in successfully offering free services. Lendio’s software has multiple tiers. We’re able to offer accounting software for free to users who want a pared-down experience. Then, we offer more comprehensive products that include accounting help from professional bookkeepers for businesses that need more assistance with their bookkeeping. 

      Free options like this work well for new businesses—especially in the tech space. It can help you build word of mouth and grow your business. To be successful, though, you need to make sure your free product maintains your company’s standards. There’s no point in offering something free if customers are going to be disappointed with the experience. 

      If the benefits generally outweigh the costs.

      In the end, you need to ensure the benefits of offering free services will outweigh the costs. That’s true of the reasons listed above, as well as any others you may be considering. It’s no good to offer free services if they’re going to drain your small business of money and resources. If you determine that offering something for free can benefit you, it might be worth a try!

      How to offer free services.

      Once you decide to offer a free product or service, the second step is execution. Much to our chagrin, customers will not give you a gold star for offering something for free. You need to execute your complimentary services well. 

      Set clear expectations

      Expectations can make or break the offer of free services. Make sure that the details of the offer are clearly outlined—for the benefit of both you and your customer. Explain expectations at the time of the offer. Don’t feel that you need to hide anything. If they only get limited access to your online classes, let them know. If you can provide a one-time offer for free admission, that’s great as long as they know. If you can provide a free trial or discount, provide clear communication of the terms. Setting clear expectations up front can prevent people from feeling surprised and disappointed, aka saving you a headache down the line. 

      Keep communication professional.

      If a customer is unhappy with your free services (we hate to see it, but occasional unhappiness is inevitable in love and business), you have to take it in stride. Remember: if you treat them with compassion when they’re angry, they may remember that when the cortisol dissipates, giving you the opportunity to win them over in the end. 

      Keep communication professional, and under no circumstances should you make them feel you’re put out over complaints about a free service. If you’re not ready to receive negative feedback on something you’ve offered for free, you’re not ready to offer something for free. 

      When to walk away.

      In some industries, like creative fields, professionals may find themselves bombarded with asks for free services. If you find yourself on the receiving end of relentless requests for free work from the same person, that may be a sign they don’t value the work you do. Offering free services should be an opportunity to market your business. It should never be an avenue for people to take advantage of you.

      It’s okay to constantly reevaluate your approach to free services. If it’s no longer working for you, change it. When customers ask why, you can clearly tell them. Again, expectations go a long way in securing and maintaining customer loyalty. 

      About the author
      Lendio Editorial Team

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