I am a developer and own a web/mobile development agency. I had some success with startup as the technical co-founder. I get pitched few times a week by people saying they have a great startup idea, and if they develop it they will give me some equity. How do I tell them if you cannot manage few thousand dollars for developing a product they shouldn't be entrepreneuring and go get a real job - without sounding like a jerk. I am okay if people ask me if I can develop it for a lower fee and some equity. I really get agitated when people ask for free work. How do I convice them they should pay. Most people who ask for free work can afford to pay.
Michael answered this question well here.
I'll add that at least once weekly I, too, have some hare-brained techie figure I must want to be their commission-based sales & marketing business partner for their unproven idea. Even had a couple come through Clarity.
I have to admit I'm not that nice about it, so I'm probably not the person you want to listen to. It's a massive indicator, though, that the person asking is totally inexperienced in business. Anyone who thinks a startup will be a success because their idea is so great clearly hasn't done anything before.
Plus they never seem to realize we already have our own ideas, our own priorities, that we're fully invested in. We don't have time for wild goose chases!
You can gently educate them if you want. "I appreciate your request," you can tell them. "I've been doing this a long time and if you're interested I can give you some feedback on what you're asking."
20 years ago I had a teacher who was a doctor of math. He taught me for three years. One day, a student asked a question, and the doctor stood there, palpitating and looking like his head was about to explode. With a wide-eyed glare, he told the student: "You don't know what you're asking! There are so many assumptions built into your question you don't even know are there."
That's how I feel when a newbie with an idea asks me to be their bizdev arm for free. You should probably start from a different point. If they're open to the feedback, tell them about the assumptions they've unwittingly built into their request, and educate them on why a paid approach works better for everyone.