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A thing I learned years ago; never work for free. Let's say you are the other company, and you get used to getting free consultancy/services from you. At what point would you think, "hey, let's start paying these guys now"? The chances are that you never would, after all if someone is a sucker enough to do work for free, why would you think that you should start paying?
Your friend is being very naive in this approach. Businesses very rarely award business to others based on them liking you. They award business because you provide a service that they need and which they don't currently have.
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Musicians fight this all the time. "Play in my club! I can't/won't pay you, but the exposure will help you get future gigs!"
There are no solutions, only trade-offs. - Thomas Sowell
A day can really slip by when you're deliberately avoiding what you're supposed to do.
- Calvin (Bill Watterson, Calvin & Hobbes)
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But musicians do get exposure this way and for some it works out very well.
A physicist doing tasks for a business? Not so much exposure there, unfortunately.
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obeobe wrote: But musicians do get exposure this way and for some it works out very well.
As a former professional musician with lots of professional musician friends and acquaintances here in Nashville and in NY and LA and a constant ear to the business I can tell you with 100% confidence that this "works out" so infrequently as to be statistically zero.
There are no solutions, only trade-offs. - Thomas Sowell
A day can really slip by when you're deliberately avoiding what you're supposed to do.
- Calvin (Bill Watterson, Calvin & Hobbes)
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Experienced musicians add "You can die from exposure."
I'm a very part-time paid musician -- kind of past that phase -- but I have a couple of regular paying audio recording gigs.
Kevin
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And "I can't pay the rent with exposure."
There are no solutions, only trade-offs. - Thomas Sowell
A day can really slip by when you're deliberately avoiding what you're supposed to do.
- Calvin (Bill Watterson, Calvin & Hobbes)
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Allowing precedents to be set can cut both ways. I understand trying to build up a business relation, but what's a business relation anyway if it doesn't involve the exchange of money?
If you show you're willing to do some valuable work for them for free, at what point are you allowed to say ok, that's enough, now you need to compensate me for that work...?
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I'm going to go against the grain here. In my experience, it is not at all uncommon to put in the work up front and trust that the quality of your work will pay off in the end. I'm mostly referring to actual software here, not advising on a grant. A company with deep pockets should have no problem paying for consultant work, and you should have no problem asking them.
Personally, I'm 7 months into a SaaS project where the customer expects a system that looks exactly like their old system...down to colors, fonts, layout, etc. All we have charged them for so far is 20 hours for custom design work. They've gotten a lot for free based on the expectations of a complete system. Unfortunately, software is never complete. When it's a 'rented' solution, it's often difficult to determine wants from needs. 
"Go forth into the source" - Neal Morse
"Hope is contagious"
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kmoorevs wrote: Personally, I'm 7 months into a SaaS project
kmoorevs wrote: All we have charged them for so far is 20 hours
What's your gut feeling--when's the payoff? I hope you're not dealing with a single individual, but are regularly in contact with an entire team and have things written down. Otherwise I'd think you might be dealing with some middle-manager who wants to get his problems solved for himself, and once everything is said and done, he's gonna look good, cut you off, and none of the higher-ups will even be aware of the situation.
Remember that some companies have asked people to fix bugs for them "as part of an extended interview process". Either they don't get their bugs fixed (so, no loss to them), or they do, but then find some excuse not to hire the sucker who did the work.
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dandy72 wrote: when's the payoff?
From my calculations, around 2 years. If we can find other customers, that would be great, but I don't have a lot of faith in my sales person.
We have team meetings at least every other week and so far, they seem impressed with the rate of progress and the final product.
"Go forth into the source" - Neal Morse
"Hope is contagious"
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Fair enough.
Let me go hypothetical here.
Say, a higher-up is not aware of this project and arbitrarily decides this is not an area they want to keep investing in. No amount of pleading makes any difference, the order came from "high up".
What then, for you?
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dandy72 wrote: What then, for you?
We presented to the higher-ups a few months ago. They liked it enough to give the go-ahead for the same project (mostly) at a 'sister facility' in the same state. That said, they will be on a monthly subscription starting in two months so technically, they can cancel at anytime if the software fails to deliver.
If that happens, I'll be left with a highly customizable ordering/shipping/invoicing web application which their competitors may be interested in. 
"Go forth into the source" - Neal Morse
"Hope is contagious"
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Fair enough 
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IMHO if you're volunteering your time, there is a limit. And if you've been helping them for MONTHS, I'm guessing you've passed that limit.
Whenever someone tries to sell me something that I really don't want or need I use the excuse that it's just not in my budget. They can't argue with that. I think you could reverse it and just tell them that things have changed and you can't afford to keep doing it this way. You might lose them. But hopefully they know the value of your time and will pony up the cash.
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Been there, done that WENT BROKE. Your respected friend needs a wake up call.
Never underestimate the power of human stupidity -
RAH
I'm old. I know stuff - JSOP
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Below is a quote from Warren Buffet. Right now, you are losing money. If your work is of value, then you should be paid for it. If they are not paying for it, they are not a customer they are a thief.
On making money.
"The first rule of an investment is don't lose (money). And the second rule of an investment is don't forget the first rule. And that's all the rules there are."
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Paul Harrington 2021 wrote: "The first rule of an investment is don't lose (money). And the second rule of an investment is don't forget the first rule. And that's all the rules there are."
This would've simplified the Ferengi Rules of Acquisition(tm).
This a programmer's site. No way this is too obscure a reference for most of us.
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Personally, I think that it is not at all unreasonable to help out a potential customer for free.
In your case, since you try to behave as rational as possible it should be easy to establish a
point of no return. The potential project will make you X dollars, you charge Y dollars/hour so
don't work more than X/Y hours on it for free. Obviously you want to keep this ratio as small as
possible. But at least you have a hard number for reference, so don't do more than 10% of X/Y for free.
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In my experience - never work for free for a business.
If anything - it will make them appreciate you and your services LESS.
But like anything in life, there can be exceptions. You've already worked with this business for three years, but this couple of months they have a cash flow problem and ask to delay their payment by a few months? That might be fine.
But what you described doesn't seem justified.
If the business is just starting up then maybe it makes sense to give them a lower rate for a limited period (as long as it's still worth your while), or maybe take some of the compensation in stocks or stock options.
But don't work for free.
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What they are doing with the rest of their funds isn't really relevant to your conversation. I'm not at all saying it isn't aggravating, but building a plant is different than consulting work, and would generally come from a different budget item; certainly capital vs expense.
There are grant writers who get paid on a success basis contract, and they can vary wildly in terms.
From a consultant point of view, it's a tough call. We've gone as far as building an MVP and successfully getting a contract from it, but my general thinking is the doable concept approach. It's a statement of what we'll do, not a recipe of how we'll do it. Don't give away the store.
There's no generic answer and it's easy for us to go one way or another on principle, but only you can tell if you're being taken advantage of. I don't like the 12:01 AM line in the sand idea; it's better to talk it through with an explanation that time is your product, blah blah blah. See where that goes.
We recently did a POC for a client that required complex approval from several other players. It worked, but we did not get the approval from other players for reasons having nothing to do with us or our client. As it started to go south, I discussed with the client some reasonable cost recovery and got agreement on it. But again, only you know the feasibility of that. But again, don't let your view be biased by other operations of the company.
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MikeCO10 wrote: What they are doing with the rest of their funds isn't really relevant to your conversation. I'm not at all saying it isn't aggravating, but building a plant is different than consulting work, and would generally come from a different budget item; certainly capital vs expense.
The simpleton in me wants to summarize this as "if you have money for X, then surely you have money for Y" (especially when Y is a tiny fraction of X).
But I totally understand the idea of different budgets being allocated to different groups operating within the same company. Or even for companies making money hand over fist, but "not having something in the budget until next quarter" (or next year).
I forget whether I had a point to make at all or not...
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The business world has this idea of the lagniappe[^]. Think of the free pens you can get at a business convention. These are usually small, cheap items that help to remind the customer of your business.
In the art world, people always try to get free art by paying in "exposure" for the artist. Serious artists know that the "exposure" is never worth it and they should be paid fairly for their work.
As a tech producer, you are in the business world, so giving away something like a pen might be worth it, but a complete product is not. Some people think software engineering is a form of art. If you agree, then you shouldn't ever give any of it away for free.
In short, always get paid for your work. If you offer a fair price and a good product/service, then you have built the business relationship by being a trustworthy partner.
Bond
Keep all things as simple as possible, but no simpler. -said someone, somewhere
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Very valuable replies here with years of insight
My resume is not even close to yours except SP 4 U.S.Army and degree in Pharmacy
Here is a little suggestion based on the concept
"There is NO FREE Lunch in the world"
UNLESS someone steals your Lunch
So go to lunch and see who offers to pay
Brian C Hart is not a free lunch he just happens to be polite
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It depends on how replaceable you are. If your advice is generic, if any PhD in your field can give the same advice, then maybe you have to work for free now in order to maybe ride the gravy train later. If your client will have difficulty replacing your knowledge, and needs it to advance his business, then you can be more firm with him about payment. Since you aren't a regular employee working with them on a day-to-day basis, I suspect the situation may be closer to the former.
It's clear that your client is already riding the gravy train. There are thousands of small businesses sucking hungrily at the government teat, particularly in the defense and aerospace industries. It's reasonable that you get a taste of this.
One thing you can do is provide off-the-cuff, one sentence opinions for free, but suggest that a more careful analysis is called for, and ask him if he has money at this time for a study. There's a lot you can do to shape his response so that it makes you more money. Ask your business friend about how to do this.
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