by Janine Vanderburg, President/CEO, JVA Consulting

As more and more nonprofits are plunging into social enterprise and earned income strategies, one of the most challenging issues they can face is how to price their products and services. The question of how to charge or what to charge seems really perplexing, especially if they are transitioning from a mostly grant and donor-financed organization.

Here are some truths that we’ve learned at JVA Consulting in our over a quarter of a century of helping nonprofits develop social enterprises.

• Some people will balk about the idea of you charging for a service, including your staff and board members. Providing ongoing education about social enterprise and why it’s important to charge is the best way to change attitudes over time.
• People value a service more when there is a price tag attached. Abundant research, as well as our own experience, supports this.
• It doesn’t make sense to charge a price that doesn’t cover all your costs. If you can’t charge a price that covers your costs, perhaps this indicates that you should not be doing this.
• You can charge different prices for the same product or service offering. Think of a happy hour strategy.
• The most important consideration in pricing is value to your customer.

Want to learn more about pricing and social enterprise? JVA has two great trainings coming up. Pricing Your Services, August 26, 2014 Dipping Your Toe in the Pool: Starting a Social Enterprise, September 25, 2014