Why I Don’t Do Free Consulting Anymore

When I first started out my path of Internet Marketing and doing Social Media consulting for small businesses, I would often do it for free. I would be asked by a business owner what they needed to do in order to truly use social media to grow their business and what I thought they should do.

This was during college and when I really didn’t think I deserved to be paid a lot for just using my brain. Yes, I was spending a lot of money on books and courses, spending my time to learn this information and would give this information away for free.

It made complete sense to me at the time to teach people the information I paid to get, without taking any money from them. I didn’t completely understand The Law of Compensation.

I grew up doing jobs that required physical labor and this caused me to feel like I had to do physical labor to get paid. Silly me. It’s funny too because my dad was paid for his mind and not for doing physical labor, so I should have understood it.

If someone asked me what they needed to do, I would literally give them everything that they needed in order to successfully use social media.I’d then run into problems when I asked them to pay me for the information that I gave them for free during our chat.

The Value Of Something Drops As Soon As You Have It

As soon as you buy a new car and drive off the lot of the dealership, the value of that car drops. It’s considered used as soon as it’s off the lot and the same is true with consulting and information.

Once someone had the information from me, the value for it dropped and they wouldn’t want to pay me for it because they already heard what I could do for them and how I would do it.

This absolutely sucked. I worked hard to learn this information and come up with something relevant to the specific business I was helping and then the person wouldn’t pay me for more information because I had already given them enough.

“When You Don’t Pay Me, You Don’t Hear Me”

I noticed something was happening when I was giving away all of this free information too. People would do nothing with it. They would act like they were going to do something with it, but ended up just forgetting about it and not doing a damn thing.

Deep down this really pissed me off. People would simply not take action on the steps I provided for them because they thought it was already done or something.

I’ve found that if someone didn’t pay me, they really didn’t hear what I was saying. Once I started charging for the information, people would then take action on it and see results. It’s pretty interesting how that worked out.

Image: Danilo Rizzuti / FreeDigitalPhotos.net

What I’m Doing Now

I’m now requiring customers to pay me 50% up-front for projects I’m doing and require the other 50% after completion of the project. The reason I’m doing this is simply because it guarantees that the people are serious about having the work done and it also gives me money up-front. It also will have a positive effect on cash-flow for Brain Smart Success.

It’s amazing how simple this concept is. The problem was that I had a limiting belief that I believed my time and knowledge wasn’t worth the amount of money that I should have been charging. I would spend a lot of money and invest a lot of time learning this information, yet for some reason thought it was okay to give this information away.

Do you think it was all the jobs that I had where I would only be paid $10 an hour to do stuff that caused me to feel that charging $100 for an hour was wrong? I think that might be part of it. Although now I believe that my information is extremely relevant and helpful so I deserve to be compensated well for my knowledge.

If you are a potential client and want to pick my brain, you will have to pay me from now on. I’m no longer giving away my information for free. This is not just so I can be a greedy person and make money. The reason is that you will actually take action and do what I’m telling you that you need to do when you give me money.

If you are to pay for something, that means you are serious about it and will take action, and I only want to work with people who take action and invest in themselves and their businesses.

You paying me for my knowledge will also pay for my living expenses and for me to do some fun stuff too so it’s not just for you. 😉
I’ve gotta pay bills just like you do and the way I do that is by exchanging what’s inside my brain for your money. So you understand that I’m not out here to scam you, but to make a living doing something that I’m great at.

My question to you:

Are you currently giving away free consultations or free information? Is it bringing you new clients or is it making you lose out on money? Leave comments below and let me know your thoughts…

Chris Hughes

Chris loves learning, going on adventures, surfing and having fun. Chris on Google+

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Derek Fodor - June 7, 2011 Reply

You’re entitled to get paid for your work at a rate well above what any company would pay you as a full time employee.  As a consultant, not only are you are only getting paid when you are working on a project, you are not receiving any health or retirement benefits.

Although I am not an entrepreneur, the company I work for gives away some information to prospective and existing clients in order to showcase the firm’s capabilities.  This free information serves as a marketing tool in order to try and win new business in the future.  More often than not, it alone does not result in new business but may be just enough to push a client over the line and win us the sale.

Derek Fodor - June 7, 2011 Reply

You’re entitled to get paid for your work at a rate well above what any company would pay you as a full time employee.  As a consultant, not only are you are only getting paid when you are working on a project, you are not receiving any health or retirement benefits.

Although I am not an entrepreneur, the company I work for gives away some information to prospective and existing clients in order to showcase the firm’s capabilities.  This free information serves as a marketing tool in order to try and win new business in the future.  More often than not, it alone does not result in new business but may be just enough to push a client over the line and win us the sale.

Chris Hughes - June 7, 2011 Reply

Hey Derek, I absolutely agree with that 100%. As a consultant we will be saving the company money as well as making the company money if we are doing our job correctly. It is a lot cheaper for us to do that without being on their pay roll full time .

This is making me think that I might need to write a blog post about how much money a business saves by hiring a consultant over hiring a full-time employee…

I feel that giving away free information is essential to build awareness and it sometimes helps with generating prospects, however the information that’s given away for free should be something that isn’t directly proportional to an individuals time. Such things like videos, brochures and information packets are a great tool for this because it doesn’t take away our most precious resource, our time. 

Have you guys found that your free information has generated enough money/prospects to cover the costs of the information (printing, etc)?

Derek - June 7, 2011 Reply

Unless we are having an in person meeting, most of the information we are providing is done electronically, so the cost of printing isn’t very high.  In most cases the information  is “off the shelf” marketing material or material that we use through the normal course of our business, so the marginal cost of generating it isn’t very high.  With that said, we do have dedicated professionals who work full-time to produce new business proposals.  This is just the nature of our business and is necessary in order to remain competitive with our peers.

So with respect to the new business proposals and presentation materials, they have definitely generated enough new business to cover the labor costs.  The same is true for the other free collateral information we provide, since the cost to deliver it electronically is minimal.  But as I said before, I don’t think the free information is necessarily winning us the sale…it’s just one part of the whole package.

I’m not an expert in the business development process for social media consultants, but I’d say that providing it electronically (unless you need to reference at an in-person meeting) should be okay. After all, the whole concept of social media is electronic…

But if you do need to print some general marketing materials, doing it in bulk should help drive costs down.

Chris Hughes - June 9, 2011 Reply

Delivering free content digitally is a great thing and cuts costs on printing for brick & mortar businesses. With consulting, I feel like sometimes I’ve just flat out given out too much for free. I read it all the time about how you can free stuff to grow a business, but sometimes I feel like I need to be more cautious about the free stuff I’m giving away. Sure it’s good to occasionally create helpful tutorial videos for my potential clients, but I feel like if I’m showing them exactly how to do it I’m making my services irrelevant. I could just as easily have charged the customer up-front, taken them to a member’s area and then shared the videos in the members area so that I at least got paid for teaching them.

It’s kind of a gray area for me and I’m trying to figure out whether I should be charging for more or just giving away less free info…What kind of business are you involved in Derek?

Dewane Mutunga - June 12, 2011 Reply

Chris,

First thing I’d like to say is GOOD FOR YOU!!!

I experienced the same plight first hand until I came to one realization: YOU ARE ALREADY GIVING AWAY FREE CONSULTATIONS.

These consultations come in the form of insightful blog posts, ebooks, tweets, etc. We as consultants (experts) are already giving away enough for free. We’d be doing ourselves and families a disservice by going beyond that.

Jeffrey Gitomer wrote in one of his books that he charges $250 per 15mins to “pick his brain” over coffee. His reasoning: only truly serious people will accept such an offer. Our content is valuable.

Glad you realized your value. 

Chris Hughes - June 13, 2011 Reply

It flat out sucked giving away so much stuff for free! It was good experience though, because I learned about common questions people had and how I could better answer them, but I wasn’t making anything from doing that!

You’re absolutely right with our blog posts, ebooks, tweets giving out free information. 

Good to see you back here man. Hope all is well in the city!

Derek - June 14, 2011 Reply

I work in sales and marketing for a large company.  It’s a different scale but similar issues apply.

Debbie Webb - June 17, 2011 Reply

Are you building a list while you give away this information? Gathering their contact details in return for your specialized knowledge?
If yes what are you marketing to them once you’ve captured the email? There are some decent email only offers available through CPA networks.
-Sorry to butt into the conversation I just felt the need to ask these things.

Chris Hughes - June 17, 2011 Reply

Yes, I’m building my list while giving away the information but still need to do a better job of capturing their information. 

I’m not too familiar with the only email offers. How do they work and do you know where I can find them?

Chris Hughes - June 17, 2011 Reply

Have you found that hiring outside consultants help your company save money? How does your company measure the results? Is it more of we generated X more clients or is it we saved Y amount since hiring this consultant?

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