Freelancing Fees for Friends — Insights from Behavioral Economics

As a growth marketer, I’ve talked with a number of friends about how to launch or expand their business. I enjoy creative problem solving and love an elegant, effective go-to-market plan, so this generally doesn’t feel like work—I legitimately enjoy it.

However, there have been a few occasions where an opportunity has come up to do work for a friend in a more official capacity. So, the question is:

How much do I charge them?

In his book, Predictably Irrational, Duke behavioral scientist Dan Ariely introduces the concept of market norms vs social norms. These are alternative frameworks that we use to approach relationships. Our expectations are determined by which set of norms we are using.

For instance, Ariely uses the example of helping someone move: When a friend is moving, you might happily come over to help pack boxes or load a truck. And while you might accept some food or beer as compensation, if the friend were to say outright “I will pay you $20 per hour to help me move,” you’d likely feel uncomfortable. This is because the payment-for-service expectation (a market norm) is being introduced, when you were simply providing a friendly favor (a social norm).

Not only does applying conflicting norms make us feel uncomfortable, but it can have a negative effect on the relationship: Ariely’s studies showed that once a market norm had been introduced, it was very difficult to revert to social norms. Once you’ve established the framework of “We are market entities and will interact transactionally,” it’s challenging to return to a system of favors that is less formal and exacting.

Which is why the idea of charging a friend to do work for them might make you (as it does me) generally uncomfortable.

So, I think the first step is to set clear expectations. I love my friends and I love helping them. As I said at the top, it brings me joy to be able to use my skill set to help them improve and grow.

But friends shouldn’t take advantage of each other. You don’t want to take advantage of your friends’ generosity, just as you wouldn’t want them to abuse yours.

So, if you establish parameters around what is casual, friendly advice and what begins to step into the territory of seeking a professional service. Hopefully, that will provide some clear boundaries on what each of you feels comfortable with.

Which brings us back to the original question: Assuming you and your friend have agreed that it makes sense for you to work for them in a more professional capacity, how much do you charge?

The whole market vs social norms conundrum may be avoided if this job is being done for your friend’s company. Whether they are the owner of the business or simply an employee, the idea of charging them your full hourly rate doesn’t seem as problematic.

But I’ve recently had two friends approach me about providing consulting for them on a personal project: one is writing a book and would like help developing the book proposal (which is essentially a marketing strategy document) and the other is launching a course and wants to create a go-to-market plan. These are not established businesses, where my services are a line-item expense: Whatever I’m charging will actually come directly out of my friend’s pocket!

So, how do I approach this? While the social norm side of me is saying “Do it for free! This is your friend! You’ll enjoy doing it, anyway,” the market norm side is saying “You have a valuable skill set! This will help your friend make more money back, and if you don’t do it, they’ll pay someone else.”

So, here’s the approach I’m considering:

1 - (Again) Set clear expectations

This is important for any new business conversation, but even more so, here: Let your friend know the boundaries. Yes, you both agree that you’ll be charging for this particular project—but does that mean all professionally-related conversations will be fee-based? Get this out of the way up front so it won’t come back to bite you, later.

2 - Consider your circumstances and establish your priorities

What’s your financial situation? How full is your schedule? How established are you, as a freelancer? If getting some experience would be helpful for you, or you’re already more stable financially, it might be worth it to you, to do the work at a significantly discounted rate. Or, if you’ve got more work than you can handle, maybe it’s better to set a high rate to convey to your friend that you don’t really have the time to do this as a favor, so they’d have to pay a premium rate. Ultimately, that depends on your unique circumstances.

3 - Make it a conversation

At the end of the day, this friendship is likely worth more than the job opportunity. Rather than using hard-nosed negotiation tactics you might employ when haggling with a general business client, make sure to let your pal know the context and make it a dialog. Whether it works or not, this will allow you to feel comfortable about where things land. If you realize that you’re not aligned on the fee, maybe you can help them find someone else who would be a better fit.

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So, that’s where I’ve landed… but I’m still not completely sure. What do you think? Have you charged a friend for work you’re doing for them? How did you approach it? Were you happy with that? Were they? Leave a comment and let me know!