There are other models of business being used out there in this wild world, beyond value-based-pricing and productizing services. I’m going to explain one that I used, why I did so and then show you how.
The gift-economy is one such model.
What is the gift economy?
You and the client enter an agreement where payment is based on what they feel is reasonable depending on the results and the process. Of course you can provide a “typical” amount so the client has an idea, but if they are happy, like a good tipper, you will be surprised at how it can work out.
When I’ve participated, the exchange has been service for money, with the exception of a carved sign and cutting board payment. Service for money is generally what this article will discuss.
I’m not alone in this space. Here are three web-related companies operating under the gift-economy:
- Gift Economy Websites: wrote the article that set off my interest in the gift.
- 8K: Polish design firm offering limited projects (logo, small designs, naming, slogan) available in the gift. They frame pricing by showing what others paid. “At the moment, the average payment for one design in US dollars is $142”.
- Jenny Rydén: Swedish web design/developer running solely in the gift. (PS: from google translate and Jenny, I learned the Swedish the word “gift” can mean either Poison or Married. what? )
The timing wasn’t ideal for my first gift-economy endeavor. I was working a job that I barely tolerated in Rhode Island when my girlfriend and I decided we wanted to move to Vermont. Moving is expensive, so I looked to my freelance game: my game was sparse. Any extra money would be graciously welcomed padding as I looked for something steady up north.
Our move coincided with my discovery of Charles Eisenstein’s work, which is an antidote to cynicism about climate change, capitalism and dominant norms. This was my introduction to the gift-economy.
The concept; “you pay what you feel is right, I trust you. I’ll work my services to your business, you’ll trust me”, resonated deeply and I was anxious to try it out. The refrain from using a contract was alluring too.
The pressure of moving and a new business model made me more nervous than usual about the proposal I was working on. It was a warm lead from a friend. Keith, the potential client, and I hadn’t talked on the phone yet.
I nervously hit send to a gift based proposal for a website redesign.
He called me immediately. At 9:30 AM, I walked out the back door of work to a frozen, zero-degree parking lot and hit accept. He was in. My gut decision was validated.
He signed on quickly because the business landscape was changing.
His was irritated in the decline of customers not picking up the phone to place orders. More and more preferred online forms.
The gift-economy made business personal again, breaking the Godfather axiom.
We went on to do multiple projects and became good friends. This is a byproduct of doing business like this.
Once they sign on, there is immediately a huge amount of trust between parties.
You each take a leap into the unknown. Trust can come later in projects, but I can tell you that it’s a very nice way to start!
This all sounds good, right? but how can I try it without disrupting my well-oiled systems?
When writing the gift proposal for Keith, I used the bulk of one of my standard proposals. Try changing as little as possible to reframe your proposal. Mine needed an adjustment, not an overhaul.
These pillars stayed;
- framed how the project would help his business succeed
- restated his problems and how my solutions would fix them
- rough milestones and timing
- what to expect from me
- what to expect from him
- a range to reference the standard cost of this sort of project
- “You are welcome to send a good faith deposit to get the project started.”
- “I design your website as a gift, and you give me something back that you feel is fair. What you give depends on your experience during the process and with the final outcome. It is a pricing model built on trust and gratitude. In the end, we should both feel as we were treated fairly.”
For more, here is a great article on more details of running a gift based business.
Broaching this topic can shake people up. It can call to question deeply held beliefs about how the world works. It’s your responsibility to offer information and field questions.
I suggest having PDFs at the ready, like this one, and links on the topic, see below if you want to learn more.
- ‘In a gift economy the more you give, the richer you are‘ (3 min)
- Sacred Economics (2 min)
- Thorough overview of Charles’s book sacred Economics, tracing the history of money from ancient gift economies to modern capitalism (12 min)
This may still seem wacky.
I understand that. It’s just one story of a freelancer and a happy client. I have lost many gift-proposals along the way and I’m not saying it’s a magic bullet to fix freelancing woes. Sneaking cautiously out of your comfort-zone or violently shaking things up can be good things.
For me, it was a shake up, and in hindsight, an answer to the question, what can I do in a world that seems to be falling apart?
Please let me know if you try this or want to!
“Trust people — they’ll surprise you.”
— Ron Shaich, co-CEO and founder, Panera Bread (after opening several locations featuring gift economy pricing)