Recently, we submitted a proposal and contract into a new client. We had worked with the principle decision-maker before. It was a government agency, but the contract was right above the limit of what could be approved without going to formal bid with a minimum of three competing bids. The office did two quick requests for pricing from two other vendors. One came in double what we offered, the other offered to do it for free.
The free offer was from a local company that doesn’t make apps for a living, but was trying to get into the business. They are a software contractor and had already done one free app for the city in hopes of future consideration for more app development. They went up against us on this particular new contract and, again, went with free.
I understand the desire to build a client base. I also understand that offering discounted (or even free) initial projects happens. This is actually at least the third time we lost a paying project to a free competing bid. We’ve developed enough apps that free isn’t in our business model.
While I can tell a potential client lots of reasons why “free” isn’t actually free, many of them only see that bottom line cost they avoid right now to get what they want and not the long-term costs of having to get support on “free.”
We’ve had people approach us about fixing “free” projects. We hear “Our developer went out of business and our app needs updating.” But our costs on trying to figure out someone else’s code are as high as just redoing their app from scratch. And they now have to deal with the lost time of waiting for a new app (or website) get developed to replace the “free” one. The really unfortunate ones still think that it should be easy to fix or update, since the first one was free anyway.
Free may have a place in early business development. And I don’t even think that first project needs to be free. That lets the client know you don’t value your work, and, therefore, any new potential projects from that client will be viewed through the “well, the last one was free, so this should be pretty cheap too” lense. We’ve had a number of potential clients offer to let us do their app for free in exchange for them recommending us to all of their business associates. Every time we’ve turned one of those “deals” down, and followed up later with the company that ended up doing it for free, they’ve never had more than one or two new apps after that free project.
On the other end, developers are being offered exchange of free work for introductions to other potential business contacts. Consider that either those new clients will know you did that work for free and, thus, want that same deal (of course in exchange for their highly valuable business contacts that will pay for work) or have their own local developers you’ll now be competing against who are willing to do it for free.
Unless your business model can make money from “free,” free isn’t a business model — even if it looks like it’ll lead to real work.