Doing freebies is risky for any contractor

Great comment here from Michael Campbell, about the “freebies” discussion that was kicked off by Rob Koci two weeks ago… 

“Doing freebies is risky, especially for new contractors with minimal experience trying to create a client base: My advice is be careful. Extra work done free of charge is not recoverable at tax time unless it is for charitable purposes.

Several years ago while renovating a pizza shop in Sydney, Nova Scotia we completing finish work inside –  installing cabinets and work stations in the kitchen. Unknown to me as supervisor, the client had asked the carpenters to install additional shelving made from off-cuts from sheet goods used in the millwork. She thought the request was minimal and should be free. When I questioned the lead carpenter about this, he told me about the request. I then reminded him and the crew that client requests for extra work not in the contract were to be referred to me for consideration/pricing and or approval.

The client arrived on the job the next day and once again picked up small pieces of plywood and asked the carpenters to make shelving for pizza boxes. The carpenter then referred the client to me as instructed.

I spoke to the client who once again wanted the work at no charge. Attempting to protect my company’s interests and to help the client understand, I respectfully offered the following as explanation for additional costs. After her restaurant opened for business, I asked her, and I ordered a pizza with extra cheese, could I get the extra cheese at no charge? She replied, “Certainly not, everyone knows cheese is very expensive.” I replied, “True, cheese is expensive. And extra shelving is like extra cheese to me.”