9 times out of 10 when interviewing with a company I'll be posed with the task of creating an app or site in order to win the work. A wordpress plugin, animation or node server that downloads flickr images via tags. What would be the proper way of telling the client that I need to be paid for my time in order to do the work? Usually when I pose this question to the company that is asking me for pitch work I don't hear back.
Usually the conversation goes something like this:
Client: "So we need you to build project X for us as part of the interview process."
Me: "Ok. That will take me a few days to get the initial prototype online for you to review. I'll give you the URL for the demo, and a file or two showing the code style."
At this point the discussion goes in one of two directions. The more likely direction happens when I'm dealing with a good business:
Client: "Great, let me know if you have any questions."
The less likely direction, though, happens when I'm interviewing with a bad or shady client:
Client: "Um, we need to have the whole source code, not just a sample."
By this time I've already sunk a lot of time in interviewing, and am probably unhappy that I didn't weed out this bad client earlier. Generally I don't give them any slack, because I don't want to work with people like this. If they understand that we're trying to build a business relationship, then they won't try to get work from me for free, and they will understand that both sides will protect themselves with reasonable measures.
Me: "I see. Unfortunately I don't do speculative work, where I would have to deliver the entire solution without assurance of payment. I've already provided you with my portfolio, and I'm even willing to build a site for you that demonstrates my ability to work to your specifications. If that isn't enough to convince you that I'm the resource you need, it's probably best if we discontinue the interviews so we can both spend our time finding a better match for each of our respective needs."
They may then give all sorts of reasons why they have to have the full site, but it's never been worth my time pursuing such a contract. There are too many better opportunities in this world to pursue the bad ones.
I can't tell for sure if you are a freelancer who is making pitches to companies to gain their work or someone trying to land a full time job.
If you are a freelancer, you need to consider that pitch work is part of your sunk costs for winning work and I would treat it the same way I would treat other nonbillable things, that is I would adjust my hourly rate a bit for all work to account for nonbillable hours. If you don't figure this in as a percentage of your rate, you also won't be able to take vacations, or do nonclient sepcific work that relates to runnning a business (like doing taxes). What you would never do is ask for this directly. This is an indirect cost and should be accounted for in your pricing model.
If you are simply interviewing, just count it as part of the cost of interviewing. If a company wants more than an afternoon's worth of work from you, then that shoudl be an indicator that you don't really want to work for them. It is not going to impress any interviewer if you ask to be paid for this work.
One approach I've taken successfully before is to agree to do it for a cost, but indicate that the amount they pay for this initial work will be applied to the larger project.
For example: "Sure thing. It'll be $300 to put together the demo. If you like what you see, the $300 will be applied to the larger project."
You get paid for your work, and know off the bat if they're a legitimate company, or just looking for freebies.