Thursday, May 02, 2013

Pricing for Non-Profit Organizations

A recent tweet by Harry Tucker raised the question:

Should you work for free?

to which I replied:

No money is okay, as for charity, but they must always pay in some form or they won't value it.

I wrote extensively about pricing in The Secrets of Consulting, much more than I could express in 140 characters. But for those who don't wish to read an entire book, I offer the following essay on the narrow topic of pricing for non-profit organizations:

The First Law of Pricing says:

Pricing has many functions, only one of which is the exchange of money

In addition, The Second Law of Pricing states,

The more they pay you, the more they love you.
The less they pay you, the less they respect you.

If you work with organizations with no possibility of meeting your usual fee scale. You can still help the client respect you by setting the proper price. All you need to remember is The Third Law of Pricing:

The money is usually the smallest part of the price.

There are many costs besides money: the psychological cost of admitting there is a problem; the labor to get approval for your visit; the difficulty of changing schedules; the time and trouble to line up people to see you; plus all the extra work the client must do after you've gone.

By arranging for clients to pay something of value to them, even if it's not paid to you, you have, in effect, raised the price. If they've invested something in bringing you there, they're more likely to listen to you once you arrive. But beware. Even though not much money changes hands you may inadvertently raise the price beyond what the clients are willing to pay.

Knowing that price is more than money, you can increase your compensation in a variety of ways that may not increase the cost to your client. I can sometimes use services such as arranged contacts with prospective clients in the area, computing services, or the use 
of a library.

I often receive free travel to a place I've always wanted to visit. I frequently ask clients to take me sightseeing around their area. Universities are particularly good at this. 

Properly planned, a university visit can be rewarding professionally, far in excess of any fee. Without a plan, you'll just be used, wrung dry of whatever knowledge you have, treated with disrespect or ignored, and then cast aside to find your own way back to the airport.

For me, consulting is a paid education. By arranging visits with brilliant people, I receive the best an organization has to offer, without extra cost to my client—which illustrates The Fourth Law of Pricing:

Pricing is not a zero-sum game.

In short, your gains don't have to be their losses.

* * *
Bio: Gerald Weinberg is author of more than 100 books, including the best-selling The Secrets of Consulting series. He is a principal in the international consulting firm of Weinberg and Weinberg, whose non-profit clients include state and national governments; churches; universities; medical centers; voluntary organizations; and the Library of Congress. The festschrift, The Gift of Time (Fiona Charles, ed.) honors his work for his 75th birthday. His website:

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