Pricing is such an important part of your business. Price too low and you’ll burn yourself out. Price yourself too high and you struggle to get clients. Though what is too high is subjective, depending on who your clients are, how well you convey your value, the outcomes you help people achieve, your reputation, and what your competitors are charging.
Getting it right is important to creating a sustainable business. And by right I don’t mean an exact price. More a price where you are earning what you want to earn and that your ideal clients are comfortable paying.
Business isn’t all about the money though. In the past year I’ve been seeing more and more people talk about accessible pricing. Pricing that more of their audience, regardless of their circumstances can afford. Without putting themselves in uncomfortable financial positions or debt.
I’ve been watching what people have been doing. Partly to generate ideas about what I would like to do in my own business but also to share with others. To spark ideas about how they may want to price some of their offerings.
Most of the examples relate to one-to-many programs, where you aren’t trading time for money. For one-to-one services its harder to offer accessible pricing, as it can impact significantly on your own income. It limits the time you have available for other work. You need to earn an income yourself to able to serve others well.
Below are 7 accessible pricing options to try out if you are looking at making at least part of your business more accessible in terms of price.
01. Pay What You What (often called pay what you can)
How it works: Clients decide how much they pay. Often there is a recommended price and sometimes a minimum price.
When it can work well: Courses where it’s all self-directed learning. That is you aren’t going to be providing ongoing support to people who you feel are undervaluing your time. That can lead to resentment towards your clients which you don’t want to happen.
Things to think about:
- Does your payment processor have this option? How hard is it to set up the tech to do.
- Do you want to set a minimum price?
- Having a recommended price. People already have a lot of decisions they are making in their life. Having to choose how much to pay you for your course will put some people off buying, even if you solve their challenge. Having a recommended price for these people makes it an easy decision, while still allowing those who can’t afford the recommended price to pay less.
02. Coffee Contributions/Patronage
How it works: This is similar to the Pay What You Want but there is no obligation to pay anything. Its often associated with writers and artists who ask for a contribution if you like what you see. You may have seen it on sites like Pixabay where you can download photos for free but they also give you the option to buy the photographer a coffee.
Where it can work well: If you product free content that people value and would like to offer a contribution for. It’s rarely a primary source of income unless you’ve got a big audience. It can often be a way to start earning money before you have an offer in place.
Some sites offer additional content for people who are patrons. I tend not to see this asaccessible pricing. Rather I think of it as a low cost membership, where the pricing is based on getting a higher volume of members to make money or in the case of not for profits, cover costs.
Things to Think About:
- Setting up the tech to take the contribution. There are options out there to make this fairly straightforward such as Patreon and Buy me a Coffee though you could simply use a Paypal button.
- The contributions are likely to be small in value. It will require a lot of dedicated fans to make serious money using this as your pricing.
- Can you keep up the pace on content creation? This may not be such an issue if you plan to replace this source of income with a paid product down the line.
03. Scholarships
How it works: There is a set price for your offering (often a course or group program) that most people pay but a certain number of participants they are given access for free or a very reduced cost.
When it can work well: You have a clear idea of who you want to support with scholarships and they are going to benefit from the course or program you are offering. They don’t need a higher level of support from what you are offering.
Things to think about:
- How you are going to decide who gets a scholarship? Are there going to be criteria or can people nominate and you are going to trust them when they say they need a scholarship. Either option can work as long as you feel comfortable with the choice.
- How do you make sure the person doesn’t feel like the scholarship person? Particularly if you think other participants may suspect someone of being the scholarship person through unconscious biases.
- How are you going to attract people to apply for scholarships. I’ve spoken to a number of businesses who have tried offering scholarships only to have no applicants. Asking for monetary help is super uncomfortable. Are there processes you can put in place that makes it feel ok for people to apply.
- Are the people you are awarding the scholarship to going to get the required amount of support. You don’t want to reinforce a sense of failure if the program is not appropriate for where they are at.
- Can the person access the program? Do they have the technology and space to take part? Again you don’t want to set someone up for failure. You may want to work with them to identify solutions so they can take part successfully.
04. Pay it Forward
How it works: This is very similar to the scholarship model but other people contribute to the scholarship fund. It’s the online business equivalent of the coffee shop where customers might pay for their coffee and one for someone else.
When it can work well: You have a built a strong sense of community with the people you support and they share your commitment to helping others achieve the same outcome or gain the same knowledge.
Things to think about:
As well as the things to think about for the scholarship other things to think about include:
- Done well it can give people an opportunity to feel like they are contributing to a community.
- This model works well for small priced offers where contributions will often cover the cost of the program, product or workshop. If the offer is higher priced then its less likely that people will be able to pay for someone else or at least a significant contribution.
- If multiple people need to contribute then it could take a while before you are able to offer a scholarship. If the delay is too great then people may question whether you are being genuine in your use of their contribution.
- You could do a hybrid model of this and a straight scholarship where you are only using the contributions to partially offset the person’s participation.
05. Sliding Scale Pricing
How it works: Pricing is set based on an individual or an organisation’s income. You often seen this used in industry associations where large members pay more than small members. Another version of this is where groups who may get less benefit are charged less. For example retired members of professional organisations who may not see much benefit from knowledge updates but still want to participate in social events.
When it can work well: If you have clear groups of people who have the ability to pay different amounts. You work with companies who are required to publish their financial statements so their income is public knowledge.
Things to think about:
- Can you check someone’s income and do you want to? I worked in an association that used sliding scale pricing and it worked well. But we were working with companies and the income wasn’t linked to an individual. I wouldn’t want to be asking individuals about their income. You can go with a trust basis and for individuals or small businesses this would be my preference. In the association we also had good systems to limit who could see the information provided.
- Participants will know you’ve got an idea what their income is from what price they are paying. Will this make relationships awkward? Will they feel they have less of a right to ask questions etc? Making everyone feel included and welcome needs to be a priority.
- You don’t need to advertise your sliding scale pricing. I know a number of people who charge small businesses less than large corporations.
06. Pro Bono Work
How it works: You offer your services for free (or in some cases a very reduced rate). Unlike the other accessible pricing models this is for service based work.
When it can work well: You feel a strong alignment to the organisation or person you are doing pro bono work for. While these services are normally offered to charities, there is nothing to say you couldn’t offer it to a business you feel particularly aligned to seeing their success.
Things to think about:
- How are you going to select the people you offer pro bono work to. Are you going to state somewhere that you do pro bono work and let people put in requests or are there specific people, charities or businesses you want to approach.
- Is there a clearly defined project or do you want an ongoing relationship? When I worked for a not for profit we had a legal firm who did all our legal work at no cost. The catch was that it was sometimes a bit slower than if we had paid. For us this compromise was fine – it was never an issue. If you may be a bit slower than normal then communicating this is key.
07. Payment Plans
How it works: Instead of requiring people to pay a large sum upfront, you provide an option to pay for the cost over a set period of time. The longer the time period the smaller the payment amounts.
When it works well: The program goes over the period of time the payment is to be made and people continue to see the value in being part of the program.
Things to think about:
- Payments will bounce. For a whole variety or reasons ranging from people cancelling them to credit cards expiring. You’ll need to have in place processes to follow up bounced payments. If people don’t pay then you need to decide if you are going to take further action to collect the debt. Some people may not be paying because they can’t while others may be taking advantage of you. If you are using payment plans to make your services more accessible then chasing cancellations for people who genuinely can’t pay defeats the purpose of the plan.
Can you create a safe space for communication for those who can’t pay to get in touch with you without shame? I’m not sure I’ve got the skills to do this but I know there are amazing people out there who can.
Cancellations are more likely to happen if they go past the period of the program but offering more extended payment plans can make your program more accessible. It’s a trade-off
- Do you have the tech to automate collecting regular payments? There are plenty of options out there to do this and I would start with what your current system allows you to do.
- Payment plans are effectively debt, albeit often without an interest element to pay. Are the people you want to support in the position to take on debt? I know some people will say this isn’t your problem. But I know I don’t want people to get into financial trouble just because they are trying to pay me.
- If you charge more for the payment plan option over paying upfront could that be seen as offering credit with legal ramifications? Laws vary around the world. In some cases you may want to say the payment plan is the normal way to pay but people can get a discount if they pay upfront.
Three things to remember
Three important things to remember if you are thinking about trying out any of these options:
- You don’t have to price all your offers the same way. I’ve seen some articles talking about a certain way of pricing as being your business model. But a business model is so much more than how you price your services. If one course is Pay What You Want and another uses a scholarship model then that is your choice.
- You can try out any of these pricing methods and if you don’t like the outcome you can stop and go back to what you were doing. A lot of what business is about is experimenting and seeing what works for you and your business.
- Are you going to feel valued by the pricing option you choose. If you think it may make you feel resentful or taken advantage of its not the option for you.
Would any of these appeal to you? Accessible pricing isn’t for everyone and there are many other ways you can contribute to your community outside of offering access to your services or programs. It could be that instead you want to volunteer for a local not for profit, purchase from other local small businesses, go green in your office or make cash donations. There is no right or wrong answer, just what is right for you and your business. You don’t have to do it all.
Pin to read later:
