Giving away free product and services is looked down upon by most business people, and rightfully so. If we don't make money, our businesses don't flourish, but here are a few reasons to use free work or services as leverage to get yourself in a better business position.
When dealing with new potential clients, one of the most important questions you'll need to answer is about your experience. For established businesses, this is time to break out that polished portfolio but if you're just getting started this poses a huge issue for you. This is where the free services come in. Don't go broke giving away your products, but a few well-placed giveaways or free services is a excellent way of showing your clients your experience. Also, clients will be much more kind about the snafus you will inevitably make while learning the business if you're not charging full price.
Reason #2 is ideal for people have been business for some time and need a boost in visibility. If you find a more established business that can benefit from your services without competing, offering a small segment of your catalog for a limited time is a smart way to gain some momentum from an already moving machine (For example, Concert promoters, musical artists and venues all need graphic designers at some point). Not only will you gain some trust from the business you've connected with, but you might even grab the attention of their competitors, which is a win-win for you.
The last reason may be the most unconventional, but it could possibly be the most beneficial. Sometimes in business, it's not what you know but who you know. Getting in the room with powerful, connected people can take your business a long way. Offering your services for free is a great way to get in the room with these people (For example, Taking pictures at a Gala to promote your photography business or creating centerpieces for a party to promote your event decor business). Reach out to the Event Coordinator with your portfolio ready and when they let you in, have your business cards, social media profiles, and websites ready. The rest is up to you.
Even with these reasons, free work should be used sparingly to make sure the value of your work doesn't suffer. Also, make sure you're constantly taking pictures for future advertisements to get the most of your free work.