Pricing Causes
Marketing need not result in a sale, where a sale is a financial transaction. So, do causes have nothing to do with price and profitability?
There are a few things to bear in mind:
- Not all transactions are financial, eg offering something in return for an email address. You may be building an email list so you can keep interested people up-to-date with your cause.
- Running a cause does not rule out financial transactions. You may have knowledge, skills or experiences that can be turned into products or services that generate income for your cause. How you use the income may be an issue; there are rules for charities, for example. But many charities employ staff and use income to pay their salaries.
- For some causes, the return on a financial contribution may primarily benefit a third-party. This is true for donations, for example. This does not rule out some benefit for the donor, eg news of how the charity spends donations or training that furthers understanding of the cause.
If there is a financial transaction then the same rules apply as for products and services.
Pricing Products and Services
Pricing products is not the same as pricing services. If you are selling a product, it is likely there are similar products on the market and their pricing is likely to impact yours. If you have a unique product, you may be able to charge what you like, at least until someone comes up with something similar or an improvement!
Services usually have more freedom to find their own price. The main thing here is not to charge by the hour. Be clear about the benefits and charge for them. The main constraint may be your reputation but do not let modesty restrict your prices.
Remember if you provide a service, the number of hours you devote to each client is limited. This means you will be able to provide the service to a limited number of clients over a given time period. So, if you need to raise £2500 per month you can do this by increasing the number of clients or increasing your prices. The former means more work for you and so at some point will hit a limit.
Products and services can be combined and either or both can be combined with causes.
Profitability
The questions in the circuit questionnaire perhaps do not do justice to profitability but here they are with my comments.
How much does it cost you to make the product / provide the service?
First, the cost to you to provide the product or service is important, especially if your price is below the cost. However, the important thing is the benefit from the product or service and this may have little relation to the cost.
Another point to consider is time may be as important as the cost. A coach may have low costs but time may be a major constraint. Is it possible to reduce time per client whilst increasing the benefit? If the benefit increases, so can the price!
How big are profit margins?
Profit margins the difference between costs and the price per unit. However, where time is crucial, you need to calculate how many clients you can manage and work out how much you need to charge to meet your needs. Products could have low margins but that may be OK if you can sell lots of them.
What other ways might there be of providing this product / service at different price points to suit different types of customers? Let’s get creative!
This is a good idea up to a point but there is also the need to have confidence in your marketing. If you have a good product or service, well marketed, it is possible potential customers will find the money, even if it seems steep at first hearing. This will work if you are confident your offer will return something of greater value than their initial outlay.
In summary, your pricing depends on the value of your offer and your confidence in that value. You need both!