So it happened again a few weeks ago…I got offered equity if i did design work for a start up company.
I’m always open to hearing from new strategic partners – and this one came as a referral. The project sounded interesting…until we got to discussion of fees. Ah, the old equity offer. Full branding and site design for a potential percentage down the line.
I’ve been down this road a few times before…and I’ve almost always gotten burned. I’ve rarely seen equity deals for designers work out – startups in the early phases are often unclear about their direction and may or may not get seed funding to fully realize their plans.
What was the red flag for me this time?
The person asking for the free design actually owned a design company. Now why would they not be able to get a design comp for their startup? Something seems fishy and I chose not to continue the conversation.
Perhaps you’ve been asked to work for free in the past.
Perhaps you’ve been promised more work in the future once you’ve “proven yourself” on this project.
In my experience people who say “there’s plenty more work where that came from” only mean more free work…
Either do it for the experience or to build your portfolio.
But don’t do it for the expectation of future paid work or the potential of profits “sometime down the line”.
Here are my rules for choosing “free work”
- I never design on “spec” (meaning, I never produce uncompensated design for the “potential” of getting the full project). Working on spec devalues the design profession and your value. Submitting work to those $99 logo and design competition sites is not the way to build a sustainable design career.
- I personally do one pro-bono project per quarter (chosen at my discretion). I get pitched a lot to do sites “for charity” or get asked to greatly reduce my rate since the site is “for yoga” “for cancer” “for dogs” etc.. Here’s the thing – they’re paying their other vendors their full asking rate (and are often for-profit companies) – why should you not get compensated your full rate?
- There are a few individuals who I will work for a lowered or no fee – typically I have either traded services or we have made alternate arrangements. I did this much more when I first started my business to build my portfolio. One woman who I traded services with not only is now a very good friend, but her connections have lead to over 300k worth of work over the years – Note I didn’t work for free, but bartered for equivalent services. These days I rarely trade – and only do it if it makes undeniable marketing sense for me OR they really have a product or service I truly use.
- Family (and I limit it to only close family members) get the non-rate.
If it truly is for a beneficial cause, I’ll often direct those parties to setup a simple squarespace or template wordpress site – but I will not oversee the project.
Once people find out you’re a designer you may get deluged with requests from friends, extended family members and new acquaintances – it’s up to you how you want to handle it – but I find the more I treat every client the same (meaning no deviation from process OR pricing) the better the end result for everyone involved.
If you are going to do an equity or trade deal consider the following:
- Realize that if you do a project for equity you may be waiting a long time for a payout – and you need to evaluate whether you can afford to NOT get paid.
- Don’t rely on a handshake agreement – what if the company gets sold or acquired and your contact no longer has the authority to grant payments? You need to be protected. Get a clear contract that outlines terms and percentages – and get it reviewed by a lawyer.
- Do the project for part cash / part percentage (that way you aren’t out completely if the project never sees the light of day) and get paid something upfront. If the prospect isn’t willing to put anything down, you’re likely going to have a hard time getting paid anything down the line (and you’ll have to chase for answers about revenue..)
- Get the rights to show your work in your portfolio – at the very least, you should be able to show the work on your own site.