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Don’t give it away

If you make “freebies” part of your business philosophy, you may kiss your business goodbye. Don’t give it away If you make “freebies” part of your business philosophy, you may kiss your business goodbye.

At my lemonade stand I used to give the first glass away free and charge five dollars for the second glass. The second glass contained the antidote.
-Emo Phillips

There is no more powerful word in the English language than “free,” but while everyone knows free stuff is good, business owners have to realize that there really is no free lunch–or any other kind of freebie. If you get something for free, somebody somewhere is paying for it.

One question I often hear from SOHOers competing with firms using freebies as inducements for new sales is, “How can I compete with this?” You only have two choices, and I prefer the second one. First, you can cave in and offer similar or better freebies to potential clients. This is a bad, bad idea, though, because it starts a freebie arms race with your competition that will only end after one of you goes broke. Second, you can emphasize your lower prices because you don’t offer “free gifts,” an oxymoron as incongruous as “congressional ethics.”

Don’t get me wrong: Some buyers, especially at organizations where the money isn’t coming directly out of their pockets, love to get freebies. Once again, you have two options here, and once again, I prefer the second option. You can write them off and concentrate on buyers who care more about their bottom line, or you can be creative with your gift giving.

It’s a business fact of life that customers like to feel appreciated by a vendor, and it doesn’t cost a lot of money to say “thanks” from time to time. On Valentine’s Day, one SOHOer I know gives small black boxes containing two truffles from See’s Candies to her favorite clients. The boxes have gold stickers bearing her company name, logo, and phone number. She’s been doing this for many years, and clients love to see her and her basket of goodies. By doing it in person, she gives them an opportunity to discuss future business under low-stress conditions.

There is a huge market out there for corporate gifts; just keep in mind that whatever you give away should reflect your business. For some SOHO operations, this might be a Frisbee with a logo on it. For others, it could be a fountain pen with the company’s name engraved in gold.

Part of competing is knowing your costs of doing business and making that a central element of your business plan. When I hear SOHOers moaning about profitability, I’m reminded of an encounter I saw between the noted photographer Charles Lewis and someone attending one of his seminars. The gentleman said to Mr. Lewis, “I’m losing $50 for every wedding I photograph.” Mr. Lewis looked him in the eye and said, “You know what you need to do, don’t you?” Excitedly, the man replied, “Yes, I need to do more of them.”

Most of the time, “free” doesn’t work as part of a business plan–witness the collapse of almost all of the free Internet Service Providers. Using freebies to get new customers comes down to one of Farace’s most unshakeable laws: It’s hard to make money when you give stuff away for free.

Contributing Editor Joe Farace has been a SOHO photographer and graphic artist for more than 30 years and loves to give and receive presents.

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