From: alexhormozi
To successfully transition from offering free services to charging for them, a structured approach is recommended, starting with building experience and testimonials, then gradually increasing prices as demand and value increase [00:07:44]. This process allows new entrepreneurs to refine their service and build credibility.
The Rationale for Starting with Free Services
Offering services for free initially is presented as an optimal strategy for new businesses or individuals lacking extensive experience [00:03:46]. This approach is designed to be the “easiest offer in the world to say yes to” [00:03:44].
Benefits of Initial Free Offerings
Starting with free services provides several key advantages:
- Gain Experience and Refine Skills [00:04:04]: It allows practitioners to gain “more reps” and improve their service delivery, acknowledging that they “probably suck” at the beginning and need to “learn how to suck less” [00:04:05].
- Lower Barrier to Entry [00:04:11]: Making the service free makes it significantly easier to attract initial clients, as it eliminates monetary risk for them [00:04:11].
- Acquire Testimonials and Feedback [00:04:00]: Free clients are typically asked to provide feedback and leave reviews in exchange for the service [00:03:56]. These testimonials are crucial for future marketing and building trust [00:05:44].
- Generate Referrals [00:02:51]: Satisfied free clients are more likely to refer friends and family, providing organic lead generation [00:07:26].
- Identify Hidden Costs [00:06:47]: If people are unwilling to work with you even for free, asking why can reveal “hidden costs” associated with your service (e.g., time commitment, effort required from the client). Identifying and eliminating these can significantly increase the perceived value of your offering [00:06:50].
Terms of Exchange for Free Services
When offering a free service, specific expectations should be set with the client [00:03:50]:
- Actual Usage: The client must promise to use the service [00:03:54].
- Feedback: The client must provide feedback on their experience [00:03:56].
- Review: The client must leave a positive review if they feel the service deserves one [00:03:57].
It’s important to be honest about being new and aiming for testimonials, often taking on a limited number of “case studies” (e.g., five) to manage capacity and learn effectively [00:05:41].
The Transition to Charging
The transition to paid services begins once people start referring others to your service, indicating a sufficient level of quality and demand [00:07:51].
Gradual Price Increase
A recommended strategy for introducing pricing is to gradually increase it:
- Initial Discount: After free services, offer a significant discount (e.g., 80% off) for the next five clients [00:07:58].
- Incremental Increases: Continue to reduce the discount in steps (e.g., to 60%, then 40%, then 20%) for subsequent batches of clients until full price is reached [00:08:03].
- Beyond Full Price: Once at full price, consider increasing prices further (e.g., 20% or 40% over) if the value delivered has significantly improved due to feedback and experience [00:08:10].
This phased approach allows for continued learning and optimization of the service based on feedback, ensuring that clients paying a higher price receive even greater value [00:08:24].
Managing Capacity and Creating Scarcity
As client slots fill up with both free and discounted clients, you will reach capacity [00:08:38]. This creates “true scarcity,” allowing you to ethically sell with conviction and command premium prices [00:08:43]. Clients will desire your service more due to its scarcity and be willing to pay full or premium rates [00:08:51].
Converting Free Clients to Paid
Once paying customers are onboarded and capacity is reached, existing free clients can be offered the option to transition to a paid plan. This involves communicating that paying full-price clients are taking slots, and the free client would need to start paying to continue receiving the service [00:09:01]. If they decline, gracefully request the killer review they promised [00:09:12].
The Value of Free Clients
Free clients are invaluable for long-term business growth [00:09:18]:
- Reviews: They provide critical positive reviews that attract future clients [00:09:24].
- Referrals: They send new paying clients to your business [00:09:26].
- Conversion: They may eventually convert into paying clients themselves [00:09:28].
By thinking long-term and focusing on building value and reputation through initial free offerings, entrepreneurs can establish a profitable business model [00:09:32].