Time Well Spent

Reid Carr has nothing to sell but time, yet finds that giving it away is sometimes best. Carr's San Diego company, Red Door Interactive, which had sales of nearly $3 million in 2005, sells web services based on how much time each project requires.

That's a double-edged sword, says Carr, 29. Because customers often don't understand the intrinsic value of an employee's time, they expect too many employee-hours for their projects. On the other hand, when employees are idle, it costs Red Door hundreds of dollars an hour in opportunity costs.

Carr has turned this to his advantage in two ways. First, he regularly prices jobs on a project basis, leaving wiggle room for overruns. Second, he has idle staff work on pro bono projects for local nonprofits. "Pro bono work is free advertising, from a cash perspective," he says. "People on the boards of nonprofits are influencers, so we said, 'Let's show them what we can do.'"

This article was originally published in the June 2006 print edition of Entrepreneur with the headline: Time Well Spent.