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The "Gift Economy" - Genius or just Stupid?

Discussion in 'General Business Forum' started by Nathanael Jones, Jan 4, 2014.

  1. Nathanael Jones

    Nathanael Jones UKBF Newcomer Free Member

    Posts: 48 Likes: 11
    I'm a freelance web designer who's always on the lookout for clever marketing ideas - and over the weekend I came across this article written by another freelance web designer about his foray into the "Gift Economy".

    I must admit the ideal fits in very well with my own personal aspirations & ethics,.. but is it just an "Ideal" or could his success be replicated in this part of the world, especially in the current economic climate?

    I've bills to pay, a young family to feed, and practically no savings that could be used as a safety net - - yet I'm still incredibly tempted to give it a try! I'd imagine it'd be something that could generate a bit of publicity, newspapers, social media attention etc - and if there were enough enquiries I'd be able to pick & choose which jobs I wanted, weed out potential messers who only want to take advantage and work on projects that have real world implications for building communities & doing good.

    I'm not a complete tree hugging hippie (Though I do lean a little that direction) - I know money will still be essential to my existence & gifts of a cow or a tonne of wheat really won't have any real world value in my 3 bed semi!

    So,... am I a few sandwiches short of a picnic - or could this actually work??
    Posted: Jan 4, 2014 By: Nathanael Jones Member since: Dec 30, 2013
  2. Tim Coulter

    Tim Coulter UKBF Regular Full Member

    Posts: 206 Likes: 101
    Wow! Thanks for a very thought-provoking question.

    On the surface, this approach seems to adopt some of the principles of Pay What You Want, except that the absence of a direct and mandatory cash exchange makes it more like a barter transaction. As you say, even if you work for honest and well-intentioned customers, you might find it hard to actually live off of some of the gifts that you receive from them.

    It's an intriguing idea and, if you decide to try it, I hope you will post your experiences here. One possible approach might be to run a limited experiment where, for example, you advertise your availability to carry out a limited number of gift projects per month or per year. This would limit your exposure and give you a real feel for whether you can replicate the success enjoyed by the article writer.
    Posted: Jan 4, 2014 By: Tim Coulter Member since: Dec 11, 2013
  3. Bane

    Bane UKBF Newcomer Free Member

    Posts: 15 Likes: 5
    It's an interesting concept. The craziest things work sometimes. Whilst it does sound crazy initially, it could give a service business a bit of an edge and something different. Could you test it out by saying you will for eg only do 2 a month or something like that? I would be worried that you do 5 and only 1 person pays you, and below what you would have originally received!
    Posted: Jan 4, 2014 By: Bane Member since: Dec 11, 2013
  4. joe-jen12

    joe-jen12 UKBF Regular Free Member

    Posts: 161 Likes: 18
    As unfortunate as it may be, I would predict that 9 out of 10 clients would pay you a fraction of what your product/service is worth.

    Maybe that's my 'glass half empty' side talking.

    Or maybe not?...
    Posted: Jan 4, 2014 By: joe-jen12 Member since: Jul 30, 2012
  5. GodOfSEO

    GodOfSEO UKBF Contributor Full Member

    Posts: 57 Likes: 7
    That depends - I'd refer to Apple's amazing way to sell products that cost about £100 to make for well over ten times that value.

    If you can package it right and get the sales pitch spot on, you can easily sell a product for a lot more.
    Posted: Jan 6, 2014 By: GodOfSEO Member since: May 10, 2013
  6. garyk

    garyk UKBF Legend Full Member

    Posts: 5,958 Likes: 1,006
    I think there are a few things that need to be considered.

    First there needs to be sufficient demand fro your product or service. Web design is a good vertical as there is stacks of demand. If your product or service is for a very small niche then I would have thought it would make little difference to growing the business if it was charged or gifted.

    Also there is alot of talk about being 'remarkable' by 'being different'. For this guy he has done just that but what if 100 web designers decided to gift their work? It creates a commodity to the point that everyone will expect web design for free. This has already happened with apps, give them away as no-one wants to pay. Now everyone is adding IAP (in app purchase) but that is becoming so prevalent that people are getting pi$$ed off.

    On the plus side you can quickly build a portfolio and case studies that further strengthens your position in your market.

    You could try it and report back with your experience, or do as that guy has done write a blog post which then gets shared!

    Posted: Jan 6, 2014 By: garyk Member since: Jun 14, 2006
  7. Top Hat

    Top Hat UKBF Ace Free Member

    Posts: 2,175 Likes: 171
    I rather like the idea, need to think about how I might use it for very slow moving stock
    Posted: Jan 6, 2014 By: Top Hat Member since: Mar 3, 2005
  8. Vectis

    Vectis UKBF Enthusiast Free Member

    Posts: 783 Likes: 203
    So what exactly would you do with this gift for your work if it's not paid in money? How would you pay your bills when you're receiving all manner of gifts in payment? How will you pay your suppliers or staff, would they get 'gifts' too? Can't see too many people being happy with that.

    Personally, I'd prefer cash. Much more practical. You can take it to a shop and spend it. Try doing that with a cow or whatever else you'd take in payment.

    Also, I wouldn't like to be your accountant at the year end trying to sort it all out! And how would you pay the accountant or HMRC?

    Not too easy to work out cashflow either if you don't know if you'll receive any or how much cash for your work.

    It's probably a nice and fun thing to do if money is not a problem (i.e. if you're a multi millionaire), but if, like most of us, you have bills to pay then it's a non starter in practical terms.
    Posted: Jan 6, 2014 By: Vectis Member since: Jun 10, 2012
  9. Moneyman

    Moneyman UKBF Legend Free Member

    Posts: 2,731 Likes: 780
    we all think that web designers charge too much. so I don't think you would get on too well.
    Posted: Jan 7, 2014 By: Moneyman Member since: May 3, 2008
  10. garyk

    garyk UKBF Legend Full Member

    Posts: 5,958 Likes: 1,006
    I think he was saying that although he did gift work he did actually get paid for it, he wasn't working for free.
    Posted: Jan 7, 2014 By: garyk Member since: Jun 14, 2006
  11. byanothername

    byanothername UKBF Newcomer Free Member

    Posts: 2 Likes: 1
    A lot of people do web design "out of the back bedroom" and as a result, it has become something of a debased currency. (I am not saying that's you - I don't know you) Designing a proper website usually involves a lot of discussion with the client to find out what their needs are and how they and their business in particular want to use the internet. Most clients only realise how much planning needs to go into the process when someone asks them the right questions. It's easy to deceive people that a simple solution will do the job - especially if they are encouraged not to think that it is important in the first place.
    Personally I feel that only that kind of thinking would place it in the realms of the gift economy sector. After all, what other people out there offering a truly professional service to users (in sectors such as accountancy or law or mechanics or indeed anything requiring skill and experience) would even consider doing it on a "wet finger in the wind" basis? I would say- and no personal criticism is intended here- only those offering a quick very basic no frills service.
    Posted: Jan 8, 2014 By: byanothername Member since: Dec 15, 2010
  12. Fred_the_frog

    Fred_the_frog UKBF Ace Free Member

    Posts: 1,801 Likes: 236
    This is what I was thinking too. Some probably wouldn't even know a fair price so would pay what they think is appropriate (without knowing the market rate) so would probably pay much less.

    The smarter ones would probably find out the going rate then pay a little less and claim they have no idea of how much it generally costs.
    Posted: Jan 8, 2014 By: Fred_the_frog Member since: Jan 30, 2011
  13. aphoppel

    aphoppel UKBF Newcomer Free Member

    Posts: 1 Likes: 1
    Hi, and thanks for sharing my post Nathanael!

    I registered here just to answer a few questions, because this topic is near and dear to me.

    First, many of the questions here I think I answered in my post. I would advise anyone who is interested in working this way to read the book Sacred Economics by Charles Eisenstein. He offers it in full on his website, or you can purchase directly from Amazon.

    Skimming through the comments above, here are some things that I wanted to point out:

    1. I don't work for free, and most people end up gifting me with cash. I offer a detailed estimate of exactly what I intend to do for each client, how many hours I think it will take, what the prevailing range of rates are for that type of work. When I am finished, I offer a detailed "time estimate" that details exactly how much time I spend, with the same range of rates. People are free to pay what they like; in my experience in close to 30 websites done this way, not ONE has failed to gift me in a way that felt whole, and most end up gifting me more than I would have expected. On some occasions, people gifted me with things other than cash, but again, I felt whole with the gift. There was not one project where I felt let down by a client. This also removes the issue that most people don't know what a website should be valued at, or claim to not know. I try to make things as clear as possible when we being. Some clients have stopped at that point, saying "I did not know websites cost so much, I could never afford that." and even when I replied that they did not have to, that they could pay would they could, they declined saying they "wouldn't feel right gifting me less than what they now understand my work to be worth."

    Take away: Most people want to pay what something is worth, they just need to trust that they are being given a fair value. This model I use accomplishes that.

    2. I am not the best web designer in the world, and there are projects that I turn down because they are outside of my skill set. But I am not offering a watered down service, either. My skill set seems align perfectly with my target market: I can build and design very good websites for startups, individual professionals, and small organizations; these people tend to be the very people distrustful of the traditional business model, particularly with regard to web designers. Some of these sites are relatively large (hundred of pages) and some are complicated (registration and e-commerce platforms), and most take me between 20 to 60 hours to do. But the clients are not very savvy in the world of technology and web design. In other words, they fear getting "ripped off" more than a large corporation. So there is a certain synergy there, with my skills and the people who need to work this way the most. But I offer a full, professional service, with a lot of discussion up front, market analysis, competitive analysis, custom typography and color scheme, etc. There is nothing "no frills" about what I do.

    Take away: Here in the US, there are law firms, major restaurant chains, all kinds of business working in the gift. It does not have to be something no frills or low value at all.

    3. Should you do this in your own business? I have no idea! I have a wife and small kids and the same bills as everyone. I started this as an experiment and it took off. I was convinced it would flop and I would taken advantage of. Instead, I have found a beautiful way to do what I love to do in a way that is fulfilling to me. But I can't honestly say it was an easy path. There were some dark patches. My wife kept me going when I was unsure, she was a big believer in the idea.

    Take away: Follow your instincts, but everyone needs a champion in their corner.

    Anyway, again, thanks for sharing the post, and I love the discussion. Please read Charles' book to understand the concept better, I am actually a very poor spokesperson for the movement compared to him. And if you have any questions or want to pick my brain about this, email me at adrian @ adrianhoppel . com.

    All the best from across the pond (and thanks so much for the BBC or we would have nothing worth watching except HBO),
    - A
    Posted: Jan 9, 2014 By: aphoppel Member since: Jan 9, 2014