Never Give Free Advice
What you can potentially get yourself into and the consequences of those unconscious decisions.
I always say that free advice is never free. Free advice can be free for your client; however, it will cost you, the consultant, those valuable contracts that you could have attained in the meantime. The opportunity cost of giving free advice or a no-fee or a heavily discounted project can lead to disastrous consequences for you and your consulting career.
Although one might think that giving a no-fee project to a client might lead you to grab those long-term contracts and higher payments, such consequences rarely occur. For the most part, you will be left with a contract; but the client will be unwilling to pay that higher fee that you want after getting that free project. They might even be so inclined to find another consultant with the same rationale as yourself to do a project for free. Remember that the client always wants to reduce their costs and getting such projects done for free is simply a bonus.
How to successfully dodge those situations
1) Instead of getting your brain picked by those potential clients at that cocktail party, try to give them an idea that will make them drool for more. Like the first line of a book, the consultant will want to grab the attention of the client/reader through that thought that could potentially transform their company (but remember, this does not mean you give away everything that you would do).
2) Once you find yourself on a one-on-one meeting with your prospective client, it’s time to start talking about the flexible nature of your fees while also telling them about your overall qualifications and how your experiences make you such a great fit for the case. The potential client will continue to ask you questions in order to get their answer; do not let up. You should be willing to have a short initial consult for free, only if you know that you will get them as a client, otherwise at a special rate, for those that you are unsure of. Make sure to give off the impression that you are not going to give business advice for free.
Bottom line, no matter how tough business is, you should never give advice for free. As tempting as it may seem, in the end you will be hurting your own business.