How looking for “free” or “cheap” is poisoning your business

“I’m looking for some free software to manage all my projects”

“Does anyone know a free alternative to XYZ?”
“I really like tool XYZ, but it’s too expensive”
These are questions you see over and over in different business groups – people looking for free or cheap stuff. Sometimes it’s software and sometimes it’s freelance work.

This mindset does not help a business grow.

In fact it’s more the opposite – it will hold a business back. Reinvesting profits is extremely important to help drive your business forward. Sure, it can be a little risky, but as long as you are smart about how you spend your money, you’ll be way better off.

I’ve been there. Once upon a time I searched high and low for free options before even considering a paid one. Slowly, my opinion changed and our business is better for it. Here are some things that helped me change my mind, and maybe they’ll help you too.

Even though we’re talking about software here, this post applies to much more than that. You can apply the same logic to other parts of business, like outsourcing and hiring.


What software can do for you

Using the right tools can do amazing things for your business:

  • Save countless hours of your already precious time
  • Make some easier so you don’t have to worry about it (save headaches)
  • Completely automate repetitive tasks
  • Actually make you more money

All of these sound like pretty damn good things for your business. Coincidentally, the same befits come from making the right hires.

So, if the upside is so great, why not invest in it?


Why free doesn’t mean good

There are a lot of inherent problems with free software. Over time, I became warier of things that are free for a few reasons.

It’s simply not as good

It sounds oversimplified, but it is often the truth.

When something costs more, the company typically has more money to invest in making the product better.

Not every company follow through with this though, which is why you should look around for reviews and what people are saying.

Harder to setup & maintain

Sometimes you can find open source alternatives that you install on your own server and maintain. We’ve used a lot of these over the years, and it almost always cost us more in the end.

That’s because there are a lot of things that are easy to forget about, like

  • Uptime
  • Server maintenance
  • Updates (often manually via FTP)
  • Problems sending email, or with email deliverability
  • Things just going wrong for no apparent reason

If you were to spend 5 hours setting a tool up, and value your time at $75 an hour, that’s $375 that could have contributed to monthly fees.

Every time you have to fix something (or pay someone to), this could have been directed at a paid tool, where all this stuff is their responsibility.

You never have to worry about any of this annoying crap that you just shouldn’t have to worry about as a business owner.

No/limited support

When something does go wrong (not *if*), or you have a question about something, you’ll probably be on your own. You have to resort to Google in the hope that someone has solved your exact problem before, often wasting hours.

This quickly undoes the fact you had a free tool in the first place.

Having someone to help can make a huge difference.


How to calculate what something is worth to you

For me it comes down to a simple value equation:

What is my time worth vs what will this tool save me?

First you need to work out what your time is worth. In the beginning, I used an arbitrary $50/hr, but there are much more clever ways to think about this.

It’s Maths Time!

Say you’re building a website that you charge $3000 for. It takes 1 week full time to build*. Assuming an 8 hour workday, that is 40 hours of work.

$3000 / 40 hours = $75 an hour.

*In reality, you’ll likely never be full time on a single website, but this is just an example. The easiest way to know how long it takes you to build a site is start properly tracking your time with a tool like Toggl.

With this logic, your time spent on building websites (forgetting making the sale, quoting and client communications) is worth $75 per hour.

If you found some software that knocks a few (lets say 3) hours off that, it would be worth $225. What if you build two of those websites per month… that’s a total of $550 per month in real saving from your business.

That tool is something I would be very happy to pay for. But how much?


The 10x rule

The 10x rule is a quick and easy way to justify value.

I first heard about this while learning how to come up with pricing for software:

Aim to price your product at a 10th of the actual value that a user gets out of it

As a user of said software, you can use this same equation. From our example, that means you could logically spend $550 / 10 = $55 a month on that software that saves you 6 hours per month.

If you are getting 10x the value, it makes it a no-brainer. But there is more to it than that…


Trading money for time

Truth be told I’ve paid for a lot of things that come in lower than this 10x rule. Those decisions always come down to the same question we’ve talked about a whole bunch today.

What is my time worth?

Also… what is my sanity worth?

Running a web design business is hard work. There were so many times where I simply had no time left in the day, and didn’t know what to do. At that point, I’d happily pay for anything that helped me claw back a few hours. This included software, plugins to help speed up the development process, and hiring people.

If you are able to charge 1000’s for a website and constantly feel overworked, spending a bit of that on things that give you some time back makes perfect sense.


After the purchase

Remember that once you sign up, you’ll need to invest some time getting familiar with the software and making it a part of your daily process. Allow for this.

The transition to your new software doesn’t stop when you sign up, it’s only the beginning*.

*Even though I swear this is what some clients think when they pay a website deposit, and then never provide the content…


Conclusion

If something is going to alleviate headache or hand you back some time, it’s probably worth paying for.

When you value your time or you have none left in the day, saving a few hours makes such a huge difference. More time for you means more time to spend getting new clients in the door, or just chilling out with your family.

Sure, sometimes you’ll make a bad decision. That’s why I always sign up monthly at first, then change to annual billing once I’m sure it’s a fit. You can always cancel if it doesn’t work out.

We’ve spent a lot of time trying out different tools to see which ones fit web design the best. Check out some of the tools we settled on here and here.

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James Rose

James is the co-founder of Content Snare and Aktura Technology. Once a web designer, his new priority is to help web designers and developers regain their lives, work less and get better clients.

He does this by writing helpful posts, building software and working with web designers to deliver the complex web development that they don't normally handle.

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2 thoughts on “How looking for “free” or “cheap” is poisoning your business”

  1. Great article James.

    It’s puzzling that when something like paid software or other investments provide 10X value people are still more inclined to try and go free and get way less value.

    If you said I could give you $100 dollars and you’d give me back $1000 I’d take that deal every time.

    • Thanks Dylan. Yeah it does seem a bit strange. I understand why people look for free in the beginning when there isn’t a lot of cashflow, but if it gets back time that can be used to get clients or do paid work, it makes a lot of sense

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