When you own a business, it’s usually just a matter of time before your family and friends request you for work. The question is whether you should charge them, and if so, how much? On the one hand, this is what you do for a living, so you don’t want to just give it away for free. On the other hand, this is your family we’re talking about. They raised you and may have supported you in your career. Even if they didn’t, it’s hard to escape the social expectation that you should give freebies to relatives and close friends. Don’t worry, you can strike a balance.
Here’s how to charge your family for work as an entrepreneur:
1. Be Transparent About Your Business Costs
It’s common for some family and friends who don’t have any personal experience with your business to assume that getting constant freebies won’t be a big deal. This is very frustrating to experience as an entrepreneur, but you must remember that a lot of people genuinely don’t know any better. In this scenario, outline how much it really costs you to provide a service or product. Sit them down and go over the cost of labour, training, materials, utilities and the loss you’d make from giving out freebies all the time. This can help you give a reality check to some of the more demanding relatives.
2. Determine What You Will and Won’t Charge For
Let’s be real; unless you’re on bad terms with your family, you probably aren’t going to treat them like the average customer. A simple way to draw the line is to decide what quick low-cost services you can give them as freebies without putting a big dent in your pocket. Ask yourself what would be reasonable to give away for free. As a writer, I wouldn’t dream of charging my cousin to proofread his CV, but I did charge my sister to write web copy for her business. The difference is that one was an easy fifteen-minute job that cost me nearly nothing, while the other was a more complex job that took significant time and needed specialized skill and experience. This way, you can still do your family small favours, but they’ll know they still have to pay for work beyond a certain threshold. It’s up to you to decide where to draw the line.
Need help on how much to charge? Schedule your Business Audit Today
3. Create a Family Discount
Giving a family discount is a classic way to appreciate your family without hurting your business. However, don’t make the mistake of giving them any random percentage as a discount. If your discount is too big, you’ll still be making a loss. You need to calculate the right percentage to discount. A good rule of thumb is to make sure that the discounted price will at least cover what you pay for materials and utilities, so only your time and personal labour are free. This means that if you make 15% profit from a product, your family discount should not exceed 15%. Otherwise, your business will be in the red pretty soon.
4. Decide the Terms in Advance
Family aside, business is business. Make sure you politely discuss the terms of the work and payment before you even begin work. Then get the details down on paper, so you don’t find yourself haggling with your Old Aunt Mildred a week after you presumably agreed on a price. Write a contract and send an invoice like you would for any other customer. This also helps you properly keep track of how much the work you do for your family really impacts your business.
It’s Just Business!
At the end of the day, do what it takes to keep your business afloat. Freebies and discounts are nice, but use your better judgment to only give them when it’s reasonable to do so. Have you ever had to invoice a family member? How did you strike a balance? Let us know in the comments.
Guest Blogger
Cynthia Kinyera is a freelance writer specialising in women’s wellness. She uses her easy-flowing prose and digital marketing skills to craft engaging high-converting content. Find out more about her work at cynthiawrites.com.