Why Free Almost Always Fails

Why Free Almost Always Fails

Kelly Kennedy: Welcome to episode 283 of the Business Development Podcast, and today we're talking all about pricing, and not just pricing, but the true value of free. I'm digging deep into lessons learned early on in my entrepreneurship career and lessons learned just over the past couple of years of coaching and building community.

Here's the thing, guys, over and over again, it's proved true. Free, almost always fails. Stick with us. You don't wanna miss this episode.

Intro: The Great Mark Cuban once said, business happens over years and years. Value is measured in the total upside of a business relationship, not by how much you squeezed out in any one deal, and we couldn't agree more.

This is the Business Development Podcast based in Edmonton, Alberta, Canada. And broadcasting to the world, you'll get expert business development advice, tips, and experiences, and you'll hear interviews with business owners. CEOs and business development reps. You'll get actionable advice on how to grow business.

Brought to you by Capital Business Development CapitalBD.ca. Let's do it. Welcome to the The Business Development Podcast, and now your expert host, Kelly Kennedy.

Kelly Kennedy: Hello, welcome to episode 283 of the Business Development Podcast. I wanna start today's show with a show update. Guys. It's something that we've been doing kind of since the very beginning of the show.

I think the value of transparency in podcasting is very important. When I started this podcast, finding data on performance of shows was very. You and far between. And the reality guys is it still very much is asking people to share their podcast stats. It's kind of like asking people to tell you how much money they make or what their bank accounts look like.

They immediately pull back and hiss a little bit. I don't know what it is about podcasting, but it seems like everybody is very afraid to share that data. From the very beginning of the Business Development podcast, I wanted to take you guys on that journey with me. I wanted to be transparent, not just for me, but for you guys too, so that you know what to expect if you go and launch a show of your own.

And so you're not just like looking at random numbers on the internet, not knowing what any of the meme you can follow the data and the track of the BDP. And so let's just get into it quickly. So where do we stand today? The Business Development Podcast has been running now for. 33 months. We've accumulated 287,600 downloads as of this morning, and we're closing in now on three years of the show.

Guys, we've released 283 episodes to date. As of this episode, we've had 139 expert guest interviews to date and 144 business development entrepreneurship and mindset episodes. We are currently prerecorded with guests to episode 358 and that guys make sure that we are well prepared for the coming year.

We're never worrying about where we need to go, where we need to get guests from. We know that we have about a half year to about 10 months of guests prerecorded at any given time. Making sure that you are rockstar listeners, always get the episode of the Business Development podcast that you have been waiting for.

As we close in on 300 episodes, we have also been recognized and honored in the following ways. In 2023, we won Quill Inc. Best Business Podcast Award in 2024. We won silver at the W3 awards in two categories. Business and consulting and best branded podcast and new. As of last week for 2025, we won bronze in the Signal Awards in the business category up against large network shows, guys.

And the cool thing too, in 2025, we were also named a top 100 Canadian entrepreneur podcast by Feedspot, and we were named a best business development podcast in 2025 by Million Podcasts. So there you have it guys. We are making progress, but you know, like any great business, like any great show, we still have a long way to go.

Podcasting is a journey and I want to thank each and every one of you for hopping on this ride with me. You, my rock stars are what motivate me to hop back on this mic week over week, month over month and year over year. Thank you for all you do for today's show. I wanted to dive deep into the perception of free.

My gosh guys, 2025 has been a whirlwind of lessons for me, you know, with regards to coaching starting Catalyst Club and, I learned a lot about the free offer this year, guys. When I first got into business, I did always charge for my business development services, and I think I owe much of my early success and success today to recognizing that I needed to get paid for my work.

However, like many new entrepreneurs, I definitely made the mistake of undercharging for my services more than I would like to admit. Much of my mindset around fractional services and pricing strategy came from one of my. Early mentors, and I wanna give a massive shout out right now to Kevin Pydde. I know that he has come up on this show more than once, but it's probably been a hundred episodes since we mentioned his name, so I think it, uh, it makes sense to bring him back in because a lot of my success, a lot of what you see in front of you for the Business Development podcast for Capital Business Development and for Kelly Kennedy was shaped very early on by Mr. Pydde. He is an exceptional entrepreneur. He's got an incredible business mind, and he was very much an early leader in the fractional BD space doing it, I wanna say, literally for a decade, at least ahead of everyone else I know as millennials would say, he was doing it before it was cool. So huge shout out to Kevin Pydde.

Thank you for all you do, my friend. I was introduced to Kevin back in 2020 and over a pizza and beverages. We started talking all about pricing models. I let him in that I was gonna be starting a fractional BD business called Capital BD. And while I'd been an operations manager for many years and understood how to run a business.

I wasn't really sure what to charge or how to charge, and since I knew that he'd spent the better part of 10 years before me in this industry, he graciously offered to help me. And it was at this point that Kevin gave me some of the best business advice I've ever received. And for my newer business owners, I really want you to listen hard.

To the points in today's episode, there are nuggets in today's episode, guys, that could change the way your business operates forever. And if you get this stuff right in the beginning, the compounding effect will be exponential for you and your business moving forward. So if you're new to business, today's show is for you.

If you have a business and you gotta make some changes or you've been doing things a certain way for a while. Listen hard because there are some great, great lessons in today's show. So let's get back to that pizza bar. Kevin looks at me and he goes, Kelly, you have to look after your family first. No matter what you do with regards to pricing, you have to look after your family first, your business second, and yourself third.

All these things take money, and if any one of them falter. Everything else suffers. This is the like work-life balance kerfluffle, guys. Okay? This is why after hundreds and hundreds of episodes of the Business Development Podcast, many, many, many, many, many interviews literally closing in on 150 interviews, it comes up over and over and over again.

Work life balance is a total myth because everything is connected. If your work life starts to suffer, you think that your finances and your home life doesn't start to suffer. It absolutely does. If your family life starts to suffer, do you think that your mental health and your work life suffers?

Absolutely. If you stop looking after yourself, do you think your family suffers for it and your work suffers for it? Absolutely. Guys, it is all interconnected. Your life is intertwined. There is no work life balance. It's like photography with the stool idea, right? We have to balance everything to get a great picture.

You have to balance work your home life, your personal life to have a great life. If any of these start to falter. Everything falters. Kevin was absolutely right about that way back when, and I was too young and dumb at the time to realize it, but he was absolutely correct. You have to balance all of them and see if you know Kevin, you know that his family comes first.

He is such a family oriented person. He works his ass off. He accomplishes a ton of things. He runs multiple businesses, but over and above everything else, he's always looking after his family. He loves what he does in all of his ventures, but none of it comes before his family and looking after your family.

And business is obviously expensive guys. As of this recording. In the Kennedy household. Let me bring you into Canada guys. For my worldwide listeners, and I know, I know that Canada's a great place and there's a lot worse places to be. I get it. But let me bring you into my life at the moment, okay?

Right now to handle our base needs, guys base needs food. Shelter and heat right now in the Kennedy household is in excess of $5,000 per month. That is ahead of anything fun that is ahead of anything over and above. Just to handle base life in the Kennedy world right now is $5,000 a month minimum. That means that no matter what, my business has to generate enough to pay me bare minimum.

$5,000. Let's get real. It has to be way more than that because you have visas, you have over and aboves, you have unexpected expenses. Like the reality is life is frigging expensive. Do not kid yourselves. Business owners, you need to make a lot of money. You need to make more money. Than you think you need, because the reality is life and business and keeping a roof over your head right now, no matter where you are in the world, is freaking expensive.

So remember that. Remember that life in 2025 is expensive, and I don't think it's going to change anytime soon, no matter where in the world you are hearing this. As Kevin and I continued our conversation that day, I mentioned that I was considering a commission based BD structure, not because that was the right thing to do, just because it was what I understood working in business development for a lot of years.

I know that I made some pretty good commissions over and above my salary, and I just thought, well, why couldn't I just price my services based on commission? This was once again, a young business owner who did not understand pricing models. Who did not understand how to charge in business. Okay? So this is why if you are new in business, it does make sense.

Get some mentors, find some people who know what they're doing, and ask them. Ask them. Ask them. Because this conversation with Kevin absolutely changed my life, and I hope if you're hearing this at the right time, it'll change your life too. See, at that time, like I said, commissions had been very popular in BD and sales roles, and they were easy to understand.

And I think in my mind I thought, okay, well I could just charge like a small rate and commissions right. It was at this moment that Kevin changed my business life forever, and I hope that this conversation does the same for you as well. Kevin said, Kelly. A business needs consistent, predictable revenue to operate a business needs consistent, predictable revenue to operate.

Commissions are nice and now understand this is a man who has done exceptionally well with commissions. I don't know the upper limit of what Kevin has done in commissions. But it is ridiculous. I know that for sure. We're just gonna go there. So this is a person who does not shy away from commissions, but here's what he said.

I have done very well with commissions Kelly over the years, but here's what they are. Here's the truth about commissions. Commissions are simply pennies from heaven. Commissions are pennies from heaven. Nothing more. Nothing less if they are offered over and above your regular rate. Thank your client.

Thank God, but don't rely on them. Don't rely on them. It was this information, guys that changed my business life forever. I actually, now between me and you, just so that you're aware, I have never charged commissions. I have never once charged a client commissions, and you might find that really amazing because I'm sure that if you've worked in business for any length of time, you've worked with business development companies, you've worked with salespeople and commissions is just.

Obvious. It's like, oh, well, yeah, obviously you're going to pay me this if I get this for you. Over and above, right. But I decided early on after this conversation with Kevin that I didn't wanna do that. I just wanted to charge a reasonable fair rate for my services and deliver them because that's what I was being paid for anyway.

Why wouldn't I just charge my fair amount upfront? And that came guys from this very conversation, pennies from heaven. If they're offered, take them. Thank your client. Thank God, but don't rely on them. This was powerful guys. This is powerful stuff. What is this guarantee for you? This guarantees that no matter what you do, you are being paid fairly for your services and your services are not free, are not commission based.

They are your career, your services, your hard earned expertise. Remember that of all the advice guys that I was given early on in my business journey, all of it. And I mean that all of it. It was this advice that put the money in my bank account to start supporting my family, run my business, start this podcast, and grow year over year.

See, your business does not run on goodwill. Here's the thing. As entrepreneurs, I talk about this with Colin all the time. We would do what we do for free if we could. I know many of us offer free services, free webinars, free speeches, free workshops. Many, many, many, many of you, many of us are out there doing that.

Why? It's not because we hate what we do, it's because most of us love what we do. We love giving back to society. We want to make an impact. We want to help people. Most of us would do this for free. Most of us would operate our businesses for free. We are that passionate about it. Listen, the Business Development Podcast, it is a passion project for me.

I've never made a ton of money with this show. I just love doing it. I love the impact we are able to make worldwide. I love changing lives. I love making business development better around the world, and this is a way that I've been able to do it. But even with this, I've had to find ways to make money doing it because I ultimately need to make money to keep this going, to keep my life going, to keep my business going.

Okay, your business runs on dollars and cents. If you wanna survive long term, you have to charge for your services. Absolutely charge fairly, but charge appropriately to the value that you provide. Stop undervaluing yourself, okay? Make sure that you are charging a base rate that can support your family.

Support your business. You before commissions, before anything else. The rest guys is pennies from heaven. You have to look after yourself, your family, and your business first. Okay? When you do that, everything over and above becomes pennies from heaven and it's incredible. You would rather have that, trust me.

Trust me, you would rather have your commissions and bonuses and everything else be over and above your base cost in life because it is that much sweeter. It genuinely becomes pennies from heaven. Not I have to make these commissions or else okay. We have to do it differently. We have to look after our businesses, our families, and ourself first, make commissions pennies from heaven.

Not a requirement in your day-to-day life, here's some rules to live by when it comes down to pricing yourselves for success. Number one, know your real costs. Okay? Your costs are so much more than your hourly time, okay? You have overhead, you have taxes, tools, travel admin, downtime, training. Like it is excessive the amount of costs that you have.

And so if you are just charging for your hourly rate and not taking these things into account, you are making about 20% of what you should be making. Very likely. Understand that everything else adds up and it adds up massively. It never ceases to amaze me. How much of my money goes to taxes, how much of my money goes to expenses?

People can look at solopreneurs, entrepreneurs and be like, wow, they make a lot of money, but you know what else they do? They pay a lot of bills, right? I can see you guys right now. Absolutely. Like we pay a ton. A ton of bills too. So remember that It is very, very likely that you are undercharging.

Understand your real costs. Understand what you need to make over and above your hourly, and make sure that you are charging yourself fairly for the value that you provide to the world. Okay. Number two, price for value, not just time. Clients don't pay for your time. Clients pay for the results and outcomes you give them.

Okay? Remember that we have to get our heads out of this hourly world, okay? Clients don't give a shit how many hours it takes you. Clients care what you do for them if you can do it efficiently. You can still charge whatever you were going to charge for that service. It comes down to how much value you provide for your efforts, not just the time.

Number three, benchmark your market. Okay? There's a good chance there's people doing what you do in the market right now. Know what others at your skill level charge and then match, exceed, or undercut it. Only if it makes sense. Okay? Nine times outta 10 match and exceed is probably where you should be.

Undercutting only works if it's part of a long-term strategic plan. Don't undercharge just because you think that will get you more work. Nine times outta 10, it's gonna bite you in the butt. Number four, add margin for growth, okay? Your business. Is going good today. Okay? But there's going to be upgrades required.

There is absolutely going to be upgrades required. Don't just charge to survive, charge to thrive, annual learning and training, and of course, scaling your business when the right time comes, okay? But you have to have money to do these things. Make sure that you are adding margin for your growth over and above the day-to-day needs.

And lastly, be confident in your ask. Okay? Here's the thing. The first sale you make, it's to yourself. It's to yourself. You have to be able to sit across the table from someone, communicate who you are, what you do, why what you do is going to be valuable for them. Then say, would you like to buy it? Would you like to invest in this?

Does this sound good to you? And you have to believe that it's a value to them before they will. Okay? So you need to sell yourself and be confident in your ask. Confidence communicates more worth than your explanation ever could remember that powerful. Now that we've discussed covering your bases, making sure that you are looked after, your business is looked after, your family is looked after.

The next lesson I want to share with you is all about the value of free and free offers, guys. This is a very recent lesson for me. Okay. This one has been hard learned at Capital Business Development with Kelly Kennedy Official with the Business Development Podcast. Okay. It's a very recent lesson that I have learned really this year, and, um, it has proven true repeatedly over and over and over again, guys, free.

Almost always fails. I want you to remember that. Put it in a rule in your life free. Almost always fails. This one has messed with me guys. It really has. It's been a hard learn lesson because I didn't wanna believe it. I didn't want to believe it. I wanted to be, I wanted to truly believe that free offers are valued.

And guys, just time over time. Time over time. It is proven false. Okay. I have spent. Hours talking with Shelby. Hours talking with Colin. I think Colin is literally sick of conversations with me talking about how free offers just don't work. We've had so many conversations and it's rang true for him as well.

Free almost always fails. That's just the truth that I've come to every time that I've given away. A seat to my accelerator program or a free pass to Catalyst Club or a free webinar guys, or a free speech, you name it. The people almost never show up, or if they do, they put in about half the effort of the people who paid to be there.

Think about that. The people almost never show up, or if they do, they put in about half the effort of the people who paid to be there. Now, in the case of coaching, that's literally no showing to coaching classes. You're just taking the ones they want. If it's Catalyst Club, it's actually participating in the club, making connections, doing the things that provide value to them, and the other members, the people who pay to be there.

They participate, they want to be there. They want to get their value and give value. The people who don't pay, they almost never do the things they need to do to get the value from it, which is very interesting. To put it very bluntly, guys, in my opinion, people don't value free, period, full stop. Not because it's not valuable.

But because they have no skin in the game, they have no skin in the game. They did not have to invest anything to be there. When a customer doesn't have to invest anything, there is no commitment and no matter the product or service, if there is no commitment, there can be no transformation. There can be no transformation.

A great example of this is Catalyst Club guys. I price Catalyst Club so affordably that literally anybody could join, literally anybody. But that small investment is enough to get people to attend the events, and that is where the magic happens. Catalyst Club doesn't work if you don't come in and participate, right?

The members who join the club and attend the events and get to know each other, they are the ones getting the most value. The members who just buy the pass and sit on the sidelines and don't participate. They don't get the same value as everyone else. See, a really cool thing about Catalyst Club guys is that I've had members say that they feel that they get a hundred times out of Catalyst Club what they pay to be part of Catalyst Club.

But the cool thing is they only get that because they attend the events. The small $30 fee is really the secret to their success guys, their small investment. Community makes them want to engage and participate in the community. When they engage, they get value. The investment is what allowed the transformation to happen.

The investment in the club, that small $30 paywall is what allows them. To feel like they can engage and participate in the club and not just feel that way, but want to see. Guys, the lesson that I've learned throughout 2025 is that free offers don't typically work, and I don't think that I will be giving free offers in the future not to Accelerator, not to Catalyst Club or anything else that I do.

In my opinion. Now, guys, free is actually a disservice to you, your business and your client literally. Everybody suffers. Free is a loss for everyone. It devalues your work and robs your client of the sense of ownership that comes from investing in your value. So here are five tips to avoid the trap of a free offer.

Number one, understand that free breeds apathy when people don't pay. They don't show up. Your price created the commitment and the value, even if it's a discounted price charge. That leads us into number two. A token price beats no price at all. Even a discounted price gives people skin in the game offer a discount over free.

Every time. Number three, set a minimum exchange note if you have to do something for free or give something away for free. Make it cost time, participation or feedback. Never nothing. Let people know that you expect something of them for that free ticket. Number four, remember that your work has worth, I'm speaking to my entrepreneurs out there.

Your work has so much worth. Every time you give away your time or expertise, you're training people to undervalue it and undervalue you. And number five. Discount strategically, not emotionally reward, loyalty, or early adoption with savings, but never give in just to close a deal. Free is not generosity, it's eroding your value.

So there you have it. Remember, nothing in business is really that new. I had to learn some lessons the hard way and so will many of you, but you guys know what I'm saying. Here is true. Think back to your experiences on free offers. Think back to your experiences in discounting pricing strategies, undercharging.

You guys know you have to make sure that you are getting your value, that you are building your value, that you are providing. True value to your customers over time? Okay. I can honestly say that the early lessons that I learned from Kevin helped me make better pricing choices from the very beginning, and learning the true value of free over the past couple of years has helped me in building the Catalyst Club and my Coaching Practice.

The next time that you think to offer your services for free, I want you to discount them instead because remember, guys free. Almost always fails. Shout outs this week. Kevin Pydde, Colin Harms. Shelby Hobbes, Carmen Leibel, Jamie Moffat, Rachel Blanton, Gary Noseworthy, Jamar Jones,Daveed Henriquez, Tatsiana Zametalina, Colin Williamsen, Vijayan Swaminathan,Jayson Chakkalakal, and Rodney Lover. Until next time, you've been listening to the Business Development Podcast and we'll catch you. On the flip side.

Outro: This has been the Business Development Podcast with Kelly Kennedy.

Kelly has 15 years in sales and business development experience within the Alberta oil and gas industry, and founded his own business development firm in 2020. His passion and his specialization. Is in customer relationship generation and business development. The show is brought to you by Capital Business Development, your Business Development Specialists.

For more, we invite you to the website @ www.capitalbd.ca. See you next time on the Business Development Podcast.