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This Bakery Owner Refused to Give Away Freebies. She's Wrong. Everybody from Fortune 500 clients to the charity down the block will ask for discounts and donations. Say yes, and build the cost into your prices.

By Gene Marks Edited by Dan Bova

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Food Delight | EyeEm | Getty Images

If the producers of a popular TV show asked you to provide free product in exchange for "promotion" would you? Laura Worthington refused.

Worthington owns Laura's Little Bakery in Liverpool, England. Recently, she was asked to bake a cake for one of the stars of a popular British TV show called Love Island. Her payment? "Exposure" on the show's social media accounts, she was promised. Worthington was not impressed.

"Exposure doesn't pay my bills," she told the show's producers, according to this Buzzfeed News report. "And I'll be honest I think it's a disgrace that companies like you go to small independent businesses asking for free stuff."

It's not the first time this has happened to her. Worthington claims she gets a request for free cakes "at least once a week." The requests come from individual people, organizations seeking donations, discounts requested by customers making big orders and even other TV shows, like the X Factor.

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"It has always been frustrating, and recently I've just said no, this can't happen anymore," she said. "I work really hard. I work a lot of 17-hour days, I do it all by myself."

Is Worthington right to no longer give away free stuff? Nope. She's dead wrong. But don't worry, Laura. I think I have a solution.

I'm asked for free stuff all the time and it drives me crazy too. I contribute services to prospective clients without asking for payment (just like my clients provide samples to their prospective customers). My company does free monthly training webinars for our products. We send out free newsletters with user tips. We write whitepapers containing free advice. We do monthly free tech support meetups. We often pitch in to help clients free when they're in a pickle. We donate to charities. When I'm asked for discounts on the products and services I often cave to get the business.

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Just like Laura, these freebies cost me time and money. But here's something I learned: no one cares. They don't care about me. Or Laura. No one cares about our costs. No one cares about our profits. No one cares about how many hours we work in a day or how many people ask us for free products. No one cares that I'm a "small business owner" and every dollar they get comes right out of my pocket. People just care about themselves. They have no inhibitions asking for a free day of training or a $5 discount on our hourly rate (seriously, I get asked for that all the time). You can either play this game or not.

Related: 4 Creative Ways to Use Free Samples to Grow Your Business

The good news: Worthington's "freebie" problem is easy to solve. It's just math.

If she took six months or a year and tracked on a spreadsheet every time she acquiesced to a plea for free stuff she would know what these demands are costing her annually. She could then easily build that annual cost into her next year's budget and, if necessary, bump up her prices by a few pennies overall to cover the additional outlay. This cost is nothing more than a marketing expense which can be spread amongst all her other costs.

When you run a business long enough you eventually understand that certain costs -- like spoilage, discounts, uncollectible receivables, samples, overtime, shipping and yes, contributions of free products -- are unavoidable. The better Laura is at tracking her costs, the easier it will be for her to build them into her overhead structure and more accurately price her products. Big companies routinely pass expenses down to their customers. There's no reason why small businesses owners like Laura can't be doing the same. I do this. It works.

Related: The Danger of Frequent and Predictable Discounts

Worthington pleaded with other small businesses on social media to "make a stand." She can tweet all she wants, but crying won't make this problem go away. People will always ask for free stuff. If she's not willing to play ball her competitors will. Stop complaining, Laura. Start accounting.

Gene Marks

Entrepreneur Leadership Network® VIP

President of The Marks Group

Gene Marks is a CPA and owner of The Marks Group PC, a ten-person technology and financial consulting firm located near Philadelphia founded in 1994.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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