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Pricing for Close Friends and Family

I wrote a blog recently about pricing, advising readers as to why they should not price too low. A reader asked me, “What about pricing for friends and family? Should you have some kind of a discount, or ‘mate rate’?”

I’m going to assume, for the purposes of this blog, that the friend or family member is someone that is close enough to you that damaging your relationship could be an ugly experience. What I mean is, this is not just a friend you see occasionally and could “drop” without consequence, but a person that could cause real emotional pain if things went awry.

For example, years ago, I worked on a family member’s brochure. I was starting my business, and told this person my hourly rate (back then I charged my time by the hour…which is inherently risky anyway) right at the outset, thinking this would keep things clear and clean. However, this family member had trouble deciding what she wanted, with several changes going back and forth, and racked up far more hours than she could afford. When I submitted my invoice, she was very incensed, said a lot of things she later regretted, gave herself 90% discount off the invoice and refused to pay a penny more. Realizing I did not have a choice but to create a huge family mess, I accepted her payment quietly and wrote off the rest. Unfortunately, it caused years of pain within the family.

Since then, I have had numerous opportunities to handle business from close friends and family, and so I would like to lay out the pricing options for you.

OPTION 1: Regular (Full) Price.

Let’s suppose you have an iron clad contract and they sign it. It doesn’t matter if you’re right and you did all the work agreed upon. If this is a person who can make your life miserable, or cause a huge mess by stacking friends and family against you, you will lose the battle no matter how careful the planning. Paper is weaker than blood. Even if you do the job perfectly, they can still whisper or feel angry that you gave them no discount, and that will create animosity. This is an option that seems logical, but can still get ugly. The odds of getting full payment, and enforcing payment regardless of what happens with the work are not good.  What’s more, when you don’t get full payment, you know they’ll be at least somewhat bitter that they had to pay the whole thing, and will likely feel you took advantage of them instead of treating them like family.

OPTION 2: Discounted Price, or “The Mate Rate”

Family members will automatically assume you are less credible than a stranger is – it’s just the way families are. Let’s face it: “I remember her when she use to poop her pants” is hard to overcome regardless of the passing years. Couple this with a lower price, i.e. “I couldn’t afford a real (insert your profession here)– so I just went to my (relative or neighbour) cause s/he was cheaper” and then next thing you know they are wasting your time not getting down to business, missing meetings, ignoring your advice or picking your work apart as “sloppy” because they’re paranoid that they’re not a “real” client to you. Conversely, they can tend to think they own you, all for their bargain price. And because you agree to it and don’t want to create a rift, they do. This too is an option you’ll regret.

OPTION 3: Give it for Free

Believe it or not, “free” is the right price for close friends and family members. If the job becomes too demanding or costly for you, you can refer them directly to your suppliers (saving them a markup), tell them how to do/get what they need themselves, or ask them to go to another service provider that is well-respected. Regardless, doing something for free is the easiest way to get out of the potential vortex of being badly used in a family-business relationship, and keeps you in control, because you are graciously giving a favour. Now, if you really do feel you must do a lot of work for them personally because you wouldn’t trust it to anyone else (and that is probably your ego talking), then tell them, “Just pay what you can.” But expect nothing. It will keep them from feeling overly entitled to your time, and they will spread good feelings of appreciation around about you instead of the other way around.

In the 18 or so years since that first family-member job gone awry, I’ve only provided help for free and it went smoothly, was over quickly, and was well appreciated.  Perfect!  I’ve seen it as kind of a way to contribute to the family, as long as it’s not overwhelming.  But regardless, it’s kept the work reasonable, and relationships good.

In summary, the ideal scenario is that the service you give your family or close friends should be offered with only one currency – love. Remember, favours in a family could also come back to you positively if you don’t ask for money…After all, who can put a dollar value on someone visiting you in the hospital in your dying days? Or taking care of your kids if ever you can’t? If ever these people have done you favours, or could conceivably in the future, then try to give a little for free. If you have to walk away because it becomes too demanding, then you can always recommend another good service provider who has the benefit of being at arm’s length – which is a critically advantageous position in business, and one that you’ll never have with your own friends and family.

I would love to hear your comments or stories on this.  Drop me a line or call to chat anytime.

 

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Jacqueline Drew
About the Author - Jacqueline Drew
Jacqueline M. Drew, BComm MBA is CEO of Tenato Strategy Inc., a Calgary-based marketing research and strategy firm. She loves to use her superpowers "to help the good guys win" and is also an energetic supermom, bandleader and songwriter.

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