Pricing + Profit = Happiness

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6 Reasons Why Not-For-Profit Pricing Lowers YOUR Profit

“Do you have a special rate for not-for-profits?” This is the question that boils my red-hot blood!

I know that we all have a good heart; I know that we all want to do the right thing; but, sometimes the cause that pulls our heartstrings stings our bank account. In short, changing your pricing for not-for-profits means you’ll too soon be a not-for-profit!

If you create non-profit pricing, you’ll too soon be a non- profit!! Click To Tweet

Why Discount Pricing for Not-for-Profits Doesn’t Work:

Lower-fee pricing doesn’t work because it:

  1. Undermines Your Brand – Pricing is part of your brand positioning; you can’t price a Tesla like a Yugo and expect to preserve your luxury status. By the same token, H&M shirts priced like Prada alienate loyal customers and drive down sales. Have you now become the Wal-Mart of your industry?
  2. Creates A Pattern Of Negotiating Your Fees – If you client migrates to another job (highly likely), they’ll continue to ask for a discounted fee.
  3. Undermines Pricing Flexibility In The Future – How do you charge $10 k for coaching when you just offered it to someone else for $3k?
  4. Lowers Your Profitability – Let’s be clear: taking on 10 reduced fee projects, lowers your revenue. And, if your goal is to make more money in 2016, you’re now on the wrong road.

#Pricing & #branding are related; don't become the @Tesla of your industry w/Yugo pricing. Click To Tweet

  1. Instills Resentment – If you feel that you’re not being paid what you’re worth, there’s a good chance the lower fee work might build resentment. And that resentment could lead to you creating less than stellar work leading you to a new baseline of mediocrity. Ouch!
  1. Takes Away Time & Opportunity from Higher-Paying Work – Opportunity knocks often just once and if you’re too busy to take on a new project because you’re swamped with lower fee work, you might have missed out on the opportunity of a lifetime.

Please understand that I’m not ruthless. I do work with non-profits, but I often find it easier to just pick one charity and donate my work. I had the pleasure of changing the name of The Child Abuse Prevention Foundation to Promises 2 Kids.

What’s your point of view? Let me know below or over at my blog.

13 Comments
  1. Hi Liz – Interesting, this has been on my mind. How do you feel about a partial trade option? For example I’ll provide my fee at a reduced rate BUT you must supply me with xyz in addition to the lowered cash price (sponsorship, free advertising, etc..) Would love your thoughts.

  2. YES! I call it the “gift with purchase” a la Clinique. They MUST pay something, but in addition, they provide you with much-needed video, a free ad, etc.

    The bottom line to improve YOUR bottom line is that you just don’t provide the same service at a reduced fee for non-profits; you change the structure if needed to create a sold win/win.

  3. 🙂

  4. Great advice!!

  5. Excellent points, Liz. But the rationale is not necessarily something that you would say to the client. Any suggestions on how to respond to the client and have that difficult conversation about the fact you can’t lower your prices?

    • Since the heads of both the United Way and Red Cross each earn over $500k per year, I always tell my nonprofits that in order to spread the goodness of their work, they need to pay for high quality work. Just as they don’t work for free or your contact accepts a salary, so do I.

      If I took a reduced fee, I would be doing a reduced amount of work.

  6. Great article, ala Lexus/Toyota. Toyota couldn’t sell as a high end luxury car but Lexus can.

    • Agree! That’s why it’s often better to create 2 different brands with different audiences and price points.

  7. Liz…this really resonates with me!
    Excellent article and people need to listen to this! It is difficult…but oh so important. Going into my 40th year of business…the one thing I have never done…lower my prices…therefore lowering the perception of value my clients are receiving from me. What I do to “sweeten” the pot (with a good client)…is to add extra service and or even a coordinating garment that will make their order that much better…therefore making them happier!
    The bottom line is to value what you have to offer…your clients will then value it also!

    • Proud of You, Laurie, and I’ve seen your magnificent work! Negotiating your prices sets you down a path of ruin.

      • Good Luck on your show. Too far for me to come see it person though. I’m sure your piece will be well received and I love the process photos so people can see how you made it. Plus you showcase your phatgorophy abilities.

    • I just wanted to say that I decided to adopt and we now have a gogoreus baby boy. I am so happy and relieved not to have to worry about FSH levels. Good luck to all of you and thanks for your support.

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