Today’s businesses can price their products / services in a variety of ways.  It’s no longer as simple as it used to be.  Many online companies give away products for free to get you hooked.  Take iTunes for example.  There is always a free song to download on the site.  Why?  Why not.  It does not cost them anything and they want you to set up an account, try it out, and find out how easy it is.  Other online companies invite you to try their service for 30 days.  It’s the same principle.

But what about bricks and mortar companies?  Like Jason’s Deli or Nashville’s McDougal’s Chicken (which I love but they need me to build them a new website).  They give you free ice cream at the end of each meal.   Is it free?  Well of course not.  It was built into the cost of your meal.  But its a perk that you love.

Which is why it can be so frustrating when you encounter an organization the nickels and dimes you along the way.  It’s not that other companies in the past have not successfully billed you for everything they could, but the new culture does not allow it.  High end hotel chains are a frustration when they charge $25 for parking, $10 for wi-fi in the room, and you feel you have to tip 10 people just to get into your car to go out for lunch.  I know these hotel chains cater to a wealthy client who expect to spend more, but in today’s culture, it’s the wrong pricing model.  Which is why Hampton Inn is gaining so much ground.

Southwest Airlines has turned the actions of their competition into one of their most successful marketing campaigns.  Southwest doesn’t charge for your bags, your change fees, etc and they’re making sure you know that their competition does.  It’s a pricing model that works and it’s building their market share and their customer loyalty.

Years ago, when Starbuck’s used to charge for their wi-fi, I told my wife Josie that they had made a crucial mistake.  It was not so much their action that made it a bad decision. It was how their competition responded.  Other coffee shops, Panera, and even fast food places like McDonald’s chose to give away wi-fi for free.  Suddenly, free wi-fi was the norm.  And Starbucks found themselves stuck in the wrong pricing model.  It was like a Mexican restaurant charging for chips and salsa.  It’s so outside the norm, it would most likely doom the average restaurant to fail.

So what does this have to do with a non-profit?  They don’t sell anything, do they?  Actually, they do.  Non-profits have to figure out what their pitch is going to be that convinces a would-be donor into giving to the organization.  Compassion International has packaged this well.  For just $39 per month, you can feed and educate a child for their life.  What you get in exchange is a picture, bio, and quarterly letters from your child. Not to mention, a personal connection to a life that you’re saving.  It’s powerful.  And it’s worth the purchase!

So how do you create a successful pricing model for your organization?   How do you get your audience excited about what you do?  How do you avoid asking them for their donation for things that they may consider “unneeded” or “unworthy” of their gift?  This is the non-profit equivalent of nickel & diming your donor.  Stay tuned for that information in a future article.