When you’re in the software business you’ll inevitably be asked if your company offers special pricing for non-profits. I wanted to share my thoughts on the topic for a while now, so here’s a blog post.
What’s the difference?
Over the past six years we’ve had hundreds of requests for non-profit discounts. They come from non-profits of all sizes. Some are huge multinational charities, some are small local volunteer organizations, others are somewhere in the middle. Just like there are small businesses, medium sized businesses, and large businesses, there are small, medium, and large non-profits.
The fundamental difference between a for-profit business and a non-profit business is the profit. For-profits are allowed to realize a profit, non-profits aren’t. Non-profits can generate a profit – called a surplus – but they have to reinvest it back into the organization. For-profits can take the profit and distribute it to their shareholders, owners, or anyone else they’d like. That’s the key difference.
There are some other differences too. Some might say that non-profits do good, while for-profits do business, but I don’t believe that 1. matters, or 2. suggests that for-profits don’t do good.
Another difference might be staffing. Many non-profits are staffed by volunteers. But many aren’t. In fact, according to the BLS, non-profits employ 8.7 million people (6% of all workers in the US). Overall, average hourly earnings of full-time workers at non-profits and for-profits are about the same. So both non-profits and for-profits have a lot of paychecks to write.
Yet another difference could be revenue from customers vs. fundraising from donors or funding through grants. But wherever it comes from, it’s still money in the door to sustain operations.
Adding this all up, I’ve never understood how these differences relate to pricing. Why should a non-profit organization pay less for software (or supplies or food or rent or…) than a for-profit company? How is an automatic discount for a non-profit fair to a full-price paying for-profit? They both have employees, budgets, goals, financial pressures, etc. If you don’t look at the tax code or the sign on the door, they are the same.
Who decides who really needs a discount?
Many of the non-profits that have contacted us asking for discounts have operating budgets far north of many of our for-profit customers’ annual revenues. Many of our small business customers are individual entrepreneurs barely making enough to pay themselves. Some of our small business customers are still in the red – making them “non-profits”, literally.
To be clear: We don’t have anything against non-profits. Over the years we’ve donated our products to select causes, schools, teachers, relief efforts, and organizations — some of which have been non-profits. Where appropriate, we try to help when we feel we can. There are plenty of non-profits doing incredibly important work around the world. And many of these organizations are staffed by devoted volunteers who generously give their time for their cause. We respect these organizations and these people.
However, we believe everyone who pays us for our products should pay the same price. We’ve worked hard to keep our prices reasonable. We haven’t increased our prices in years. From the small guy just getting started in his spare time on the weekends, to an established small business, to organizations assembled for a cause, to small groups inside some of the world’s largest corporations, our published prices are the same no matter who you are or what you do. We think that’s the only fair way.
I recognize some companies use discounted software for non-profits as a way to sneak into the for-profit companies some of the people work for at their day jobs. While it may work, it feels like a slimy motivation.
We believe prices should be fair, public, and consistent
We don’t want to be one of those companies that has a “who you are determines how much we can charge you” pricing model. We find those models unfair, dishonest, and flat out unappealing. The best pricing is clear, fair, public, consistent, and predictable.
When you buy from 37signals you should know we aren’t charging you more than someone else just because we can. You aren’t paying a higher or lower price based on your negotiation skills. That doesn’t mean an exception here and there for a rare special case can’t be made — it means that when someone sees a published price on our site they can be confident that that’s the price 99.9% of their fellow customers are paying.
Matt
on 22 Sep 10Bingo: “Some of our small business customers are still in the red – making them “non-profits”, literally.”
I agree. They shouldn’t come knocking at the door, hat in hand, waiving the “we make no money” flag.
So said organization of 1,000 new bcamp users start draining your support team and time; only resulting in you losing more money.
They pay your fair fee, your product inherently gets better, ultimately benefiting them.
Des Traynor
on 22 Sep 10Like
Good points, well made. Nice one Jason.
stephen
on 22 Sep 10Choose “your” personal charities and give your discount or freebee – treat everybody else equally as a customer for profit. There is an unending stream of those who feel that they should enjoy some special privileged status. There is no guilt in declining because you have your charities already.
non-profits are industries first and foremost – their survival depends on them acting as industries and are organised as such.
Geoffrey
on 22 Sep 10Said another way: “If we discount our prices, we won’t have any profit. And without profit, we owners won’t be able to give personally to the charitable organizations we feel most warrant our support. I’ll check out your organization. Maybe it will make my list.”
Jon Smock
on 22 Sep 10As a person who volunteers weekly and donates money monthly, I agree with you completely. If you charge different rates to non-profits than to for-profits, you’re either ripping off the for-profits or undervaluing yourself for non-profits (ok, if it’s a donation, like you mentioned). Either way, a consistent and public pricing model seems to be the most honest/good to me.
Blair Enns
on 22 Sep 10Agreed. There are two prices: full price and free. This applies to services, software, goods, etc. You (37S and others) have your limited number of favourite causes that you support by doing work completely free or giving product for free. This pro bono work is the right thing to do, makes the world a better place and gives you the strength (and moral high ground) to charge full price to everyone else, eliminating the mushy middle of quasi-deserving causes or barely profitable clients.
When you don’t do this pro bono work you get caught in the difficulty of deciding who should pay what price. It’s far easier on you emotionally if you have a policy about it and only two categories of pricing.
Wade Winningham
on 22 Sep 10Can the amount of your discount be considered a charitable donation? Thus providing a benefit to both you and the 501©3 organization?
Xackr
on 22 Sep 10It’s inconsistent on the other side too. I did a ton of volunteer work for a non-profit who turned around and paid a competitor of mine thousands of dollars for a tiny bit of work. So I quit. No more freebies from me.
Having one price that represents a fair profit over costs that is consistent across the board is the ONLY way to go.
Frank Lakatos
on 22 Sep 10A flip-side that you briefly touched on, should we charge more for the companies that do really well? An analogous argument could be that since they are so prosperous and able to pay, we can make them pay more. However, extremely successful companies still have their burdens, such as massive debt.
Victor P
on 22 Sep 10Basecamp has been very helpful for running my startups.
I would happily donate a year of basecamp to a charity who needs it (specially if they are a global distributed team). I’m sure this is money well spent.
There may be more 37s customers willing to do this. Would be great if you guys can do the match.
Gary Bury
on 22 Sep 10Unfortunately there are people in this world who will not buy unless they believe they are getting a discount off the rack rate.
As much as we’d all like to turn their business away often they can turn into great customers. Non-profits often fall into this category.
Sometimes you can get around it by offering a donation rather than a discount. It might amount to the same but it helps keep a uniform pricing structure.
Esteban
on 22 Sep 10I never looked at it from that angle. But it makes sense, as far as money goes the only difference is their label. Good read! Thanks
Bryan
on 22 Sep 10Great post and I could not agree more.
Too bad the automobile industry is not able to standardize pricing in a similar way. It is aggravating that every time I buy a car and discuss what I paid for it with friends, neighbors, relatives etc… there is always someone who got the same car for far less cause they knew someone who knew someone. And people wonder why that automobile industry is in the toilet.
@_BMF_
on 22 Sep 10It seems to me that the discount is just one in a set of tools for your business. Whether it be used to draw in more sales, purchase moral credit, or to assist in some other manner, is up to the business owner. It is certainly not dictated by a label used for someone else’s business.
This post definitely fits in with my perception of the 37signals mentality, which is, don’t use a hammer when a screwdriver is needed.
The only questions I am left with are; did you ever offer a discount to non-profits? If so, how do you think they will react to their perceived raise in price?
@BMF
Mat
on 22 Sep 10As one of those non-profit 6%, we pay for your service, full price. We need you to give us the “full monty”. Don’t forget that many “non-profit” web services are often crippled.
Software that is a client license is in fact a different type of product. I appreciate that companies that are replicating bits are helpful in their licensing. But your service is just that. Software is something copied; web services require maintenance. This makes your SERVICE very much worth the price.
Benjy
on 22 Sep 10But wherever it comes from, it’s still money in the door to sustain operations.
Richard Rutter
on 22 Sep 10Interestingly, in the UK there is no corporate entity defined as a “non-profit”. There are entities defined as “charities” but these are allowed to make profit, and indeed many make huge profits. In fact charities can also be registered as companies, thus having a dual existance.
Charities get tax benefits in the UK, and in order to be classed as such, they must provide “benefit to the public”, not to a specific individual. Their aims, purposes or objectives have to be exclusively those which the law recognises as charitable.
The upshot is that, as with non-profits in the US, charities in the UK do not necessarily deserve special discounts just because of charitable status. As you say, it’s better off (from a fairness and also a tax perspective) to charge all people and entities the same and make a donation to any charities that one wishes to help.
Socrates Vicente
on 22 Sep 10I don’t understand what part of a pricing model where “non-profits get it for free” isn’t clear, consistent, predictable and, arguably I admit, fair.
The money you are not taking from funds raised through charity work and donations is being used for the good of communities, not to support a for-profit business, even if it also adds some good to the community, ultimately it is for the good of the owners, the rest is a byproduct or a business necessity.
Also it’s a bit of a fallacy to simply state that a pricing model that, honestly (without shady tricks), charges according to what a company can fairly pay for the service that is being provided, or are progressive taxes all those bad things you said?
Marc N
on 22 Sep 10You’re neglecting the fact that small businesses are then able to take the difference in pricing and write it off as a charitable donation. For a software company that doesn’t suffer loss of physical inventory this can be a great way to push down taxes at year’s end.
But… given how noble and principled 37S is, I’m sure you don’t bother writing off any of your myriad charitable donations, amirite? Ragged-Trousered Philanthropists and all that…
Brad Gessler
on 22 Sep 10Its easy to read this and think, “screw special pricing for non-profits,” (or any other segments) when the fact of the matter is; its OK to lower prices for these folks so long as you offer them a different product.
We have special pricing for K-12 teachers, who are very price sensitive. We offer this on a completely different plans page for K-12 teachers with slightly different features (grading for example is included but a bunch of other features are not, including email support). Is it unfair the we offer K-12 teachers lower prices? I don’t think so, otherwise they would have to go through their schools purchase order process which is a huge nightmare and would make our product inaccessible.
Be smart about how you tell your customers no.
Oh, and we drastically reduced our non-profit inquires but entitling our plans page, “Business & Non-profit Plans”.
Colin Summers
on 22 Sep 10And you resisted pointing out that some non-profits (a certain church springs to mind) are simply covers for criminal enterprise (sexual abuse of children). You don’t want to be in the business of deciding which non-profit is worthy and which is not.
The Mormon Church is the largest commercial enterprise in Utah. Thousands of acres of lands, orchards, farms… all under the umbrella of “non-profit.”
Charge ‘em double, I say, since they aren’t paying taxes and your business is.
Matt White
on 22 Sep 10I would be interested in hearing about the tax benefits as well… My firm has done a large amount of pro-bono work using employee time as our “donation”, and haven’t been able to reduce our tax liabilities at all. Since there are no actual physical goods exchanged and only services, the IRS doesn’t allow you to use that as a deduction. Not sure how this would relate to a more structured product like a web service, though.
In any case, excellent post Jason. Well thought-out and clear as always.
Amazing Rando
on 22 Sep 10@Brad Gessler: What you refer to as “special pricing” sounds like a different product offering, not a discount. Perhaps that product could be offered openly as an option?
Michel
on 22 Sep 10While I agree with most of your points, there’s a key difference between a non-profit and a for-profit.
The non-profit tries to reduce its costs to give more to the cause while the for-profit tries to reduce its costs to give more money to the shareholders/owners/investors.
So by reducing the price (maybe you could just offer non-profits the price of the option before the one they use, giving them a small rebate only and benefiting a lot of them), you’re giving to people in needs instead of removing from people who invested.
That said, some non-profits are truly run like a for-profit and don’t necessarily help their cause as much as they could, that’s why I always like to see how much of their money is lost in administrative costs.
Brian Rivera
on 22 Sep 10Working for a non-profit, we pay for Basecamp too, full-price. And we are incredibly happy that we have something in our toolkit which provides all the functionality we need at an affordable price.
Even if 37signals were to offer non-profit pricing, we wouldn’t take it. We think that the products you make are affordable to begin with and already easy to use.
Some of the other web products out there charge way too much for not even half of the functionality and ease of use that we get with Basecamp.
Karl Pearson-Cater
on 22 Sep 10Good post. This is the key point:
I work for a non-profit, and we bought your software. I can’t recall if I asked if you had non-profit pricing, but I probably did only because many business DO offer different pricing. i certainly did not push the issue with your sales folks, mostly because of another point you made in your post and it was totally obvious to me at the time:
Agree.
Rich S
on 22 Sep 10Interesting post! I had never really thought about it that way…I had always assumed that non-profits were under more financial duress and therefore could use the discount.
However, when you put the facts you mentioned into consideration, I think I agree with you. As long as you can still make special exceptions for the 0.01%, it makes sense.
Joe S
on 22 Sep 10Dislike
Its obvious from your writing that you’ve only seen non-profits from a distance. If I’d never gone to volunteer or join the board of a non-profit, I might agree with you – but this simply shows your naivete. If you want to understand, you must go and see for yourself.
Sometimes its best to generate goodwill simply by going with the flow rather than relying on intuitive logic.
JF
on 22 Sep 10Its obvious from your writing that you’ve only seen non-profits from a distance. If I’d never gone to volunteer or join the board of a non-profit, I might agree with you – but this simply shows your naivete.
I don’t wear my volunteering or charitable donations on my sleeve, but I have some experience.
Educate me about the experience I don’t have. Why do all non-profits deserve a lower price than all for-profits (even if those for-profits aren’t profitable)?
Justin Knechtel
on 22 Sep 10I’d like to offer some thoughts from the non-profit side of the equation. I run a non-profit. We provide web / graphic design and consulting services to startups, non-profits, and small businesses. We also educate and provide resources to freelancers and small business owners for free. We’re new and still growing, and like many small growing businesses (for profit or otherwise), we do what we can to get by.
We don’t run basecamp because we can’t afford it yet. Simple as that. We take advantage of charity pricing from many hardware and software vendors when available, but I never A) ask for them, and B) make a decision based on the “deal we’re getting.” I’ve run into non-profit directors and corps that completely disagree with this, but you (37 signals) need to make a profit just as much as we do.
Victor P has the right idea and that’s how we operate. We have our recommended rates when we invoice clients, and those are more or less the same as some of the bigger agencies in our city, however, clients pay what they can afford and often times receive funding for their projects from their own clients. We get donations from the Victor Ps of the world so that we can acquire software and hardware from great vendors like 37signals.
Like you said in your post, 37signals returns profits to your founders/investors, where we just funnel ours back into the business. We all have competitive salaries (again, as you mentioned) and prefer to help the struggling freelancers and small businesses compete.
Kudos to 37signals for being public about this. This topic bothers me because I feel it hurts our reputation as a non-profit when vendors assume we want a special handout – it’s simply not true. When the time comes for us to make the investment in Basecamp and the tools that go along with it, we’ll gladly be joining the mass and paying full price.
C.
on 22 Sep 10As someone that owns a business as well as runs a nonprofit, I most certainly see the reason that NPOs need the help of the community they live in to survive.
In my business, I regularly give away freebies to those that can’t afford it—both to individuals and nonprofits. The individuals would most likely steal my software anyways, and the nonprofits? They can benefit from my services…I feel that I should give back where I can. Sometimes it is in direct contribution, sometimes it is flipping a switch and saying Have At It, But Realize This Is Costing Me Money.
In my NPO, the only people that ever get paid are the workers that wouldn’t have done it otherwise. The jobs I can’t get volunteers to do are the ones paid. Xactr says he stopped volunteering when a competitor got a lot of money that it sounds like he should have rightly been paid. I don’t know how it is with the company he worked for, but we would have had to do the same thing—conflict of interest and the IRS scrutinizes us pretty hard to make certain we aren’t shuffling work to friends. Occasionally we can, but most of the time we tell those involved we can’t offer them work if they want to volunteer for us…no good deed is ever rewarded.
But most NPOs I know of, most of the people doing the bulk of the work are not paid, Not talking about places like Red Cross where the president makes a few million a year which I find ridiculous. And if it comes down to using paid software and not being able to serve our clients - or using inferior stuff that allows us to treat even one more kid, I’ll use the inferior one - and try to help them improve it.
I’ll admit, I moved over to ActiveCollab years ago when 37S couldn’t give us a deal that was affordable—I think the email was, “you can use the free limited version…that only works for a month”...I was using the full version that my commercial company was paying a monthly fee for Basecamp to connect my people across the world and it worked PERFECTLY. Unfortunately, using AC was a pain, but it was free at the time, and I ended up submitting bug reports and eventually figured my way around a lot of the problems that when belts needed tightening, my for-profit (not associated at all with the other) went over because I could get my people running on this.
There are a lot of reasons to help NPOs…the biggest is that if you wish to be a part of a community solution, you offer your resources when possible. I know in my for-profit, the costs to me are negligible and the benefits have outweighted the costs every time. In a sense, we do it because it is good business.
EricS
on 22 Sep 10I remember when my father-in-law owned a small (8 people) ad agency that had many colleges and non-profits as clients. He was constantly being berated for not giving steep discounts or completely free work “because we’re a non-profit and we deserve it so you’re cold hearted to not give us everything for free!” He would sometimes explain that his employees expected TO be paid, and that his mortgage holder expected TO be paid, and that his family expected TO be fed, etc. Yes he did pro-bono work ( a LOT of it in fact) where he deemed it appropriate, but he ran his business as a business.
While at first I wanted to disagree with you, the logic of your posting and my personal observations lead me to aqgree with you completely.
Robby Grossman
on 22 Sep 10Great post. Too many people use “non-profit” as a proxy for “good.”
Joshua Pinter
on 22 Sep 10Solid points Jason. Probably feels good to get it off your mind.
In the past I’ve done contract web development for non-for-profits and I’ll donate back a portion of the total contract job as a charitable donation. But my proposal price and final price does not reflect this. The work and price are the same no matter if your organization can keep profits or not.
At the end it’s our decision to make the donation or not; that’s based on their work and our feelings towards it.
Brad Gessler
on 22 Sep 10@Amazing Rando you’re exactly right, but think of it as packaging a product up differently. Its difficult to launch a completely different product/brand as opposed to changing up the feature set that a particular product offers to each segment. Of course you want to be careful not to cripple your product through segmentation.
Heath
on 22 Sep 10My product offers a discount to non-profits. But I look at it more as a donation from us than just giving out discounts. What difference does it make if I charge them full price and then turn around a donate the difference? Hmmm… I guess I could then write off the discounted difference if it were an actual donation. Interesting….
Keivn Harris
on 22 Sep 10Agreed, there often isn’t too much of a difference, although some non-profits function off of very small, next to non-existent budgets. I work full-time for a non-profit and just barely make 5 digits a year as we have a limited budget & I do some fundraising (which for-profit employees typically do not have to worry about) but I plan on starting to use Highrise once I fundraise a little more to supplement my salary.
Steve F
on 22 Sep 10Wow! When did Signal v. Noise become a hang out for Tea Partiers? The greed and lack of empathy in this post and subsequent “right on” comments is disturbing.
The vast majority of the non-profits are dedicated to issues that matter far more than almighty dollar. If you believe in causes like feeding the hungry, justice for the indignant, and equal rights for all – help in any way you can – volunteer your time, your expertise, or god forbid – give a freaking discount!
If you are concerned that your efforts or money may be wasted, do your homework and find the organizations that are doing good work with the resources they have.
If you choose not to support these endeavors, that’s fine, but attacking non-profits and boasting that all you really of give a shit about is your bottom line under the guise of “fairness” is just plain tacky/Forbesian.
Joshua Pinter
on 22 Sep 10@Heath: Exactly. Plus, it doesn’t de-value your work or product and keeps pricing consistent.
Geoff
on 22 Sep 10What about students? I think student pricing makes a lot of sense from a small business standpoint. It works for the business because you want the next generation to embrace your products, so you cut them a deal with the hope that they will eventually become full-price paying customers after they graduate. It works for the student because they typically have little or no income, but nevertheless have needs similar to those of business users. Plus students may be more open to trying new products, especially if they are cheap. It’s a win-win.
Alan
on 22 Sep 10Would love to disagree here, as I volunteer a lot of my time for my industry’s professional organization, but I love your point about prices being “clear, fair, public, consistent, and predictable” (On a side note I wish the big airlines operated this way). And having to deal with pricing quotes from engineering software companies, I’ve come to despise the “who you are determines how much we can charge you” pricing model. “So how much for your product?” “Well, how much you got?” Just ain’t right.
Georgeh
on 22 Sep 10As a 501 c 3, we are power users of basecamp. It is the only invoice I feel okay about paying because we derive tremendous value. Also, non profits are simply IRS designated technical decisions, and, as such, make no guarantees about the organization’s ethics, etc. I heart what ya’ll do. Keep on truckin!
Andy Rice
on 22 Sep 10Your post hits on some of the fundamental flaws of the ‘for-profit’ vs. ‘non-profit’ business model. Working at a non-profit, you really see some head-scratching things (God forbid we invest in our fundraising capacity, we might lose our inflated 99% efficiency rating!), and this is one of them.
The ‘for-profit’ and ‘non-profit’ dichotomy is simply misleading. I can think of many ‘for-profit’ businesses that produce social good, and many ‘non-profit’ businesses that waste money and are dedicated to self-preservation above all else (and vice versa).
In the end, the conversation shouldn’t be about profit or not, it should be about creating real value. The profit is just a vehicle that allows more value creation.
Mike Hickerson
on 22 Sep 10I work for a nonprofit and use 37signals’ products. I also believe in a free market, so I don’t see any problem with their policy. To each their own.
Here’s a possible reason for different pricing: when for-profit businesses invest in a product or service, the goal (ultimately) is to make more money from that investment. For nonprofits, that might be the goal sometimes – buying paper so you can send out grant proposals, for example.
More often than not, though, those purchases have to be made out of revenue stream – donations – that remains steady whether or not the nonprofit makes that purchase.
Let’s say I subscribe to Basecamp in order to run a homeless shelter more efficiently. We might save money from our increased efficiency or gain some additional donations because of our better service, but we’re never going to make more money off the homeless people we’re serving. Heck, if we become so efficient that we’re able to serve more homeless people, that might actually cost us money because we have to buy more blankets, food, clothing, etc.
Yes, some nonprofits have pretty huge budgets, especially in the education and healthcare sectors. Most, though, are operating on a shoestring budget dependent on voluntary donations. If a business wants to offer a nonprofit discount, I hardly see how that is “unfair and dishonest.”
James
on 22 Sep 10Some non-profits don’t have budget north of anything and need any help they can get.
The charitable ones try to keep there operations expenses as low as possible so that more cash goes towards the end goal. They are actually rated on this. So by not cutting them a discount, it just mean less money for the intended purpose.
The lack of sympathy is disturbing and enough to cancel my subscription. Best of luck, keep your prices consistent, and keep you money. But you won’t get mine. Thanks for everything.
Heath
on 22 Sep 10Here is a point you should consider – my company offers valid 501©3 organizations a free website (we are a website builder) and we have close to a thousand of them now. I would say most of these (95% maybe) are small one, two or three person shops. They don’t make any money. My brother is one of these and he pretty much funds his whole 501©3 organization out of his own pocket. Donations don’t pay him at all – they just reduce how much of his own money he uses. Having a discount means a lot to people like this.
J
on 22 Sep 10James said: Some non-profits don’t have budget north of anything and need any help they can get.
What about the entrepreneur who’s starting a new business to help feed his family? S/he could use all the help he could get too. That’s the point of the post. There are lots of people/groups who can use all the help they can get. 37signals tries to help all of them equally by offering low, consistent, public, and hassle-free pricing.
Selectively suggesting only non-profits need help simply because they are “non-profits” is closed minded and unproductive.
Ann
on 22 Sep 10Another benefit to a single pricing model is there’s no sale pressure. The prices, terms of service, & product details are listed on the website. Users are free to comparison shop without having to haggle with sales staff. Adding additional pricing models for NFPs, students, educational institutions, etc, adds unnecessary complexity. The transparency & simplicity of the current model saves everyone time.
Colin
on 22 Sep 10I’ve worked or volunteered for several non-profits. Asking if you offer a discount doesn’t necessarily mean we feel entitled to a discount. Because so many companies choose to offer non-profit pricing (commenters above have offered a good perspective on why a company may do this), we have a fiduciary responsibility to ask. If a charity I contributed to paid $100 instead of $80 for a service, I’d be angry.
You can offer a discount or not—that’s your choice. But please recognize that a non-profit is being responsible if it inquires whether you do.
SH
on 22 Sep 10To qualify a couple of JF’s points, we do receive hundreds of requests for special pricing…every month. Our support team answers around 8 requests a day, 7 days a week which is almost 3,000 requests a year.
However, there’s a big difference between a non-profit and a charitable organization.
We do offer comped accounts to charities we think are doing great work and we want to support. Yes, their goal is typically the same as a standard non-profit, but their bookkeeping rarely is. The American Dental Association is a non-profit, but their goal to get the public to floss (and to lobby for dental organization) is not on par with charity:water, a group we support charitably.
David Andersen
on 22 Sep 10@Steve F – It is better to remain quiet and be thought a fool than to open your mouth and remove all doubt.
Non-profit monger
on 22 Sep 10Any money is better than no money at all. If someone would like to use a web-based resource (such as Basecamp, in this case), but cannot afford to pay the full price, what kind of sacrifices would your business have to make in order to allow them to use that resource at a price they can afford?
I’d negotiate with anyone willing to pay something, so long as that ‘something’ is a reasonable offer. That way, I’d collect more money at the end of the day then if I were to flatly turn them down.
Let’s say a group of volunteers start a support group for battered and abused women. They collect some meagre donations, and cannot afford the full price. But still they can pay you something, and using your product would really make a palpable difference in the lives of poor victims. You’d have to really be a bunch of cold hearted bastards to turn them down and to deprive abused women of getting some kind of help, any kind.
Think twice about some such scenario… No one’s asking for charity here, many are asking if we could meet them half-way on what they can afford… there are many very nice people capable of doing great things, who are struggling and are willing to pay a fee that’s commensurate with their abilities, and who shouldn’t be arrogantly brushed off on the grounds of some principle.
Anonymous Coward
on 22 Sep 10So this is how you can afford $3,000,000 sports cars!
Mike Reichner
on 22 Sep 10It’s really very simple.
Most non-profits provide their services to the public either for free, or at prices significantly below market rates. Every dollar that they spend on software, salaries, rent, etc is a dollar that cannot be spent providing their core services to their constituents.
Sure, there are “non-profits” out there sitting on millions or billions of dollars to ensure their continuity. And I encourage you to refuse to give them discounts.
But your failure to find a difference between for and non-profits is at best superficial, and with regard to the salary comparison, it’s flat wrong. (If you compared only paid personnel at non-profits against for-profits, you MIGHT come close in range (but I doubt it). But most non-profits are reliant on volunteers as supplementary staff, and those volunteers bring the average WAY down.)
Another Jason
on 22 Sep 10Certainly a lot of 501c3 organizations are not worthy of being called “charities” by your definitions, but a lot of them are, and I would assume a lot of software companies that do give these type of discounts do it because they do honestly want to help, but don’t want to or can’t make that kind of evaluation on a charity-by-charity basis.
IMHO, better to help out a few of the next charity:water-type organizations as well as a few of the next ADAs even if maybe the latter doesn’t deserve it. However, I wouldn’t really expect something as modestly priced as Basecamp to do this kind of discount.
As a software developer for educational non-profits however, I have frequently taken advantage of more expensive software licenses that have a non-profit option. Without those discounts we wouldn’t be able to offer the product that we do, at least not to the level that it is with their help via discounts.
I hope that if other software providers are thinking that dropping their non-profit discounts sounds like a reasonable idea they also pay attention to the message of generally reasonably-priced software.
Anonymous Coward
on 22 Sep 10Most non-profits provide their services to the public either for free, or at prices significantly below market rates.
Why should 37signals feel obligated to subsidize every single non-profit? No matter the cause, it’s 37signals responsibility to take a piece of their own profit margin and give it to any non-profit that asks? That feels remarkably arrogant on the part of the non-profit. Just because their model is one of no-profit (or providing services below market prices) they think that everyone else in the world should provide them with their products at below market prices too? How is that even reasonable?
Karl Bastian
on 22 Sep 10I am the president of a non-profit who didn’t think to ask fir a discount because the price was so reasonable and the tool so powerful for my company. That said, this policy, I can tell you – is costing you customers who will as a result never use the product and therefore never discover how helpful it is. I can tell you that, unfortunately, as one commenter above noted, the culture of many non-profits is not to buy anything full price. It is almost policy, so you lose business you otherwise would get. A better solution would be a stripped down version at a discounted rate get them hooked. No archiving (make them delete projects), less projects, limited characters and comments, no reply by e-mail, etc. Let them see the power but be frustrated by the limitations. Soon they will pay the small difference for the full version, and if not – at least you have some revenue, and your full paying customers won’t feel slighted as they are getting more.
Just a thought.
Anonymous Coward
on 22 Sep 10One benefit to offer discounted pricing is to eliminate the 3,000 yearly requests for special pricing, even if the discount was minimal.
Eric
on 22 Sep 10I agree with this post. Not all 501c3 organizations are a worthy cause to give to. If you don’t agree with their mission (or view them as a lobbying group) there is no reason at all to give them a discount.
By all means support the charities that you support, but doesn’t require you to support charities that you do not wish to support.
Brian Armstrong
on 22 Sep 10Well written and congrats for having the guts to post this Jason! Most companies would have been too fearful to say what they really believed. 37S is providing a great example of what it looks like to run a company that stands for something.
Michael
on 22 Sep 10This is about public-standardized vs. behind-the-scenes-thoughtful charity. 37S gives behind the scenes for the most part. That’s the best way to do it.
Lars
on 22 Sep 10Perhaps a better title for the post would be, “We Select Which Customers Get Discounted Pricing,” and then focused the discussion on what criteria you’re using to determine which get that pricing.
Instead, I sense that your post has muddied the issue by making what appears to be a principled stand against variable pricing, but then is undermined by an admission that you do, indeed, alter your pricing depending on the customer.
Further, you offended some people who work at non-profits by making a kind of equivalence between business and non-profits. This equivalence isn’t fair for a couple of reasons: 1. Businesses have products and, by definition, work to enrich their shareholders/owners. 2. Non-profits do not have shareholders, owners or products. For some, this is precisely why they work at a non-profit. 3. More often than not, non-profits that are interested in an explicit (albeit opinionated) way of improving the world around them. 4. More often than not, businesses have no such intended mission. (This doesn’t make them bad).
After reading the post and the subsequent discussion, it’s obvious to me that there was probably a better way to write this post that would have made more sense given the facts.
Lars
on 22 Sep 10two corrections to the post above—most non-profits do not have products. Some do, such as the OLPC.
And to be clear about this—businesses not having a vision of how to improve the world around them and that not being bad . . . the fact that non-profits tend to have a vision for improving the world around them does not necessarily make them good.
Zak
on 22 Sep 10Very interesting article. I work in fundraising for a nonprofit organization. I think you have a great point about making prices fair, public, and consistent and don’t believe any business should be under an obligation to provide a special discount to nonprofits.
However, I would like to add one point to this discussion, which is that a key factor in a nonprofits ability to raise funding (either via grants or donors) is their overhead rate (a.k.a. the percentage of their budget spent on administrative and other non-direct service expenses). Rightly or wrongly, funders associate a low indirect rate with organizational efficiency, and nonprofits routinely forgo needed organizational investments (such as new software packages) to keep this rate low.
Again, I’m not saying that 37Signals or any other business should offer a discounted rate to nonprofits but it is worth noting that charging full price will often mean that nonprofits are forced to choose between making necessary infrastructure investments that will help them better serve their clients or preserving their fundraising ability.
Paul Carney
on 22 Sep 10Thanks, Jason. We have been struggling with the same questions and you have provided some awesome insight.
It all boils down to basic economics: charge a reasonable fee and any organization that gets value from the price will purchase it. Value = benefit/price. If a non-profit (or for-profit) cannot see any value from a product/service, then don’t buy it.
On the other hand, if the group does see a value, like better communications or tracking of ideas and projects, that can lead to more efficient running of the organization, and the price is right, then they should buy it at market price.
And to comment on the “homeless shelter” comment above: they should buy it if they find that it has value to them. Just as they would go around turning off the lights and unplugging items that use electricity to save money, they can justify the expense of a service to create operational efficiencies that also save them money. Instead of asking the electric company for a discount, they practice efficiency.
Justin French
on 22 Sep 10I couldn’t agree more. In my experience, people care far more that they’re earning/paying the same amount as everyone else than they care about the exact amount.
I’ve just gone through a few purchases recently with a far less transparent pricing and sales process. We wasted so much time on conference calls with sales guys, reading proposals, negotiating the price and emailing back-and-forth on something that should have taken a few minutes to decide. Publish the price, I’ll pay it if I think it’s proportionate to the value I’ll receive.
This is the same reason why no one enjoys buying houses or cars. It comes down to negotiation skills and bravery.
There was one car company (can’t remember the name) that published firm prices to take that awful negotiation game out of the purchasing experience.
Anonymous Coward
on 22 Sep 10Paul, that argument doesn’t make any sense about the homeless shelter. Telling non-profits to be ‘extra’ efficient is laughable – they already are way more efficient than normal businesses. How many for profit business get employees to work for free? How many get their employees to pull money from their own pockets to subsidize accomplishing their goals? The majority of these organizations run on very low budgets and many of them use the owners own funds to fill in the gaps. Sure a homeless shelter might purchase your product for full price if it provides value. It might help them save money in the long run and be able to afford 10 more beds for the homeless. But if you discount your software for them, now they can afford 15 more beds for the homeless.
Alan Ommus
on 22 Sep 10I respectfully disagree – a lot.
Our firm hasn’t got the time to evaluate every non-profit request for “donation”, so we give every 501©3 half-off everything. Otherwise we’d give a few pet charities free software and leave everyone else out in the cold.
My 75-year old mom gets into the movies cheaper than I do. My 5-year old kid gets into the aquarium for cheaper than I do. It’s totally expected and nobody raises a fuss.
When you sell small-ticket items to lots and lots of customers, you just can’t spend the time deciding who’s worthy of a donation and who isn’t. Just fax me your 501©3 docs and you get the deal. Simple as that. And we’ve never had a complaint from anyone.
GregT
on 22 Sep 10Well, the fact that you can’t remember their name and that they don’t do it anymore tells you how well it worked for them. (I hate buying cars too. But hugely variable pricing is a model that the car and airline industries clearly need).
David Andersen
on 22 Sep 10“It might help them save money in the long run and be able to afford 10 more beds for the homeless. But if you discount your software for them, now they can afford 15 more beds for the homeless.”
And if everyone gave everything away for free, just imagine how much more good could be achieved!
Adam
on 22 Sep 10I’m a consultant for a company that specializes in software for non-profits. I have heard every argument on both sides. Essentially it boils down to this. The non-profit is choosing your software/service/whatever for a reason. That reason might take the form of time saved by using our software, it’s easier for volunteers to learn, we’re cheaper than the competition, we allow them to replace multiple systems with one, maybe we can offer them something they simply couldn’t do without. All it really means is it allows them to concentrate on their core mission better and most see value in paying for that. The non-profit purchase is no really no different than the for-profit: value.
It gets my goat when non-profits ask for discount. It gets worse when you agree to scope and price, do the work for them and then they ask for a discount after they get the bill claiming poor as their a non-profit. They have my sympathy but fair is fair.
Mike Reichner
on 23 Sep 10Why should 37signals feel obligated to subsidize every single non-profit?
I haven’t even remotely suggested such a thing.
Vendors have three choices when responding to non-profit discount requests:
1) approve them all, 2) deny them all, or 3) develop a clear and publicly disclosed set of criteria for which approval will be granted
All three are valid choices.
My initial reply criticized a facile comparison that, in retrospect, is a weaselly justification for denying all or, more perniciously, the ones that don’t meet criteria for which the OP doesn’t have the courage to publicly disclose.
Pick one of the three options and publicly disclose it.
BS
on 23 Sep 10Well, the fact that you can’t remember their name and that they don’t do it anymore tells you how well it worked for them.
Soflaweb
on 23 Sep 10Agreed! A business is a business and will do whatever it can to make revenue and reduce expenses. If that entails calling yourself a non-profit to reduce expenses, so be it. How many for profit corporations are affiliated with non-profits? Why do you think this is? Being fair and even to everyone is a great policy.
Mikel Lindsaar
on 23 Sep 10Jason, as someone who donated (as a volunteer) 10 years of his life to non profit organisations (from drug rehab through to disaster relief), I find this attitude a bit short sighted.
I run my own (for profit) consultancy now, and yes, we offer discounts to non profits and charities. We also do a lot of pro bono work. Does it hurt my bottom line? Absolutely. Can I afford to do it? Absolutely.
Helping the community is something we all should do. The corporatism disease that is infecting this world pushing that the only important thing is the balance sheet is, frankly, disturbing.
The biggest problem with your stance is that you are confusing (and so penalising) the majority of NPOs and charities that ARE good people doing good work, with the small minority of those NPOs that are using it for less than charitable purposes.
Something to think about. Would it really kill you as an organisation to offer a discount on your pricing for non profits?
Didn’t think so.
Mikel
Jason Leister
on 23 Sep 10Seems to me that we’ve got a completely dysfunctional relationship with money.
And stuff like this is a symptom of it.
Making money = bad.
Wanting to make money = even worse.
Not making money = good.
So if your purpose is to NOT make money, well then, you’re good. You should get something for that. Right?
Eek.
Value is value folks. Anything else is just a story made up by someone who wants other people to play along.
Is there a reason we can’t help people AND profit?
Of course not.
Ryan
on 23 Sep 10@Marc N: The IRS does not allow you to deduct the retail cost of a service. You are only permitted to deduct the actual cost incurred when providing the service. It’s one rule, that while preventing much abuse, removes all financial incentive to donate a service. A better version of the rule would allow you to deduct the fair market value of a service.
Adi
on 23 Sep 10If you want to help others, just help them. Don’t go begging for discounts or coming up with moral justifications to be helped.
In this way, you may solve a problem(helping the people you want) and introduce another problem in the system.(expecting help from others)
John Smith
on 23 Sep 10The major point that most people fail to understand here, is that the so called “Non Profit” organizations are using the lack of tangible value software/service has, to undermine the value/effort put in this.
If anyone want to help, he is free to do so with his time/money. Failing to get money from customers, even if they are “non-profit”, weakens your possibilities to do good for other people since you lack the money and the effort (support) used to help customers who paid nothing translates into not being able to help elsewhere.
Like paying taxes. Like paying good salaries to people that deserve that.
No to mention that a disturbingly large part of the non-profit oganizations are purely scam efforts to get money. We have all seen cases of major executives of non-profits drivings luxury cars which they paid in full, while fighting world hunger.
John Smith
on 23 Sep 10I’ll even go the other way and see that all “for-profit” organizations are much more sustainable and helpful in the long-term. They pay the taxes, they hire people and give them fair compensation (which in turn creates stable/happy families, etc).
How about no-one pays no-one and then we all gather together and start figuring out how to discount everything in order to make good… for who?
Why not we just do what we do and do good without marking it “non-profit” for other people to see and brag about it? Isn’t sustainig a 5 member family good? What else am I supposed to do to be “good” in someone’s opinion? Rip parts of my body off?
Grover
on 23 Sep 10I’m not sure why you feel like this required such a long justification. I doubt the majority of the non-profits that have contacted you feel that they are morally owed a discount, they’re just asking. Like it or not, most companies and services do offer a discount for non-profits. So it makes sense to see if there’s a discount available for any service for which you’re shopping.
I’d wager that (with some exceptions) the majority of the pressure you’re feeling is self-inflicted.
JF
on 23 Sep 10The biggest problem with your stance is that you are confusing (and so penalising) the majority of NPOs and charities that ARE good people doing good work, with the small minority of those NPOs that are using it for less than charitable purposes. Something to think about. Would it really kill you as an organisation to offer a discount on your pricing for non profits?
The majority may be doing excellent work, but again, how does that justify a discount? The majority of for-profit companies are good honest companies doing good work as well. Many of them struggle to meet their budgets just like many non-profits do. Most of our customers are small businesses – they aren’t loaded multinationals with endless budgets. Why should they pay full price and a non-profit pay a discounted price? I don’t see the distinction.
That’s what this post is about. It’s not about would it kill us to sell something for a lower price. We could and we’d be fine, yes. But why should we? I think that’s a very fair question to ask and “just because these guys do good” isn’t a reasonable answer. It’s not about who does more good or who deserves more help in general, it’s about asking, honestly, why one group should pay a lower price automatically just because they are this type of group or this type of group.
DT
on 23 Sep 10@JF >>why one group should pay a lower price automatically just >>because they are this type of group or this type of group.
I believe the culprit here is “software/services”. They do not have a tangible value (i.e. tangible and easy to figure out cost of manufacturing). None of these “non profit” dudes walks into 7/11 and buys food discounted because of his “status”. And then – why should they have the software/service for free then?
I am afraid many of the terms “Web 2.0”, “Non-profit”, “HTML5”, etc, lose their true meaning because of an abuse like that.
Wayne Schulz
on 23 Sep 10Kudos to 37Signals as well for very clearly offering a free trial that while it does require a credit card is remarkably easy to cancel without any hassles or required phone calls to an overseas call center.
This factor alone would both keep me coming back to buy more and to recommend the service to others.
Levi
on 23 Sep 10NPO are always playing a shell game but most don’t see it or know about it. SPCA, PETA, and other foundations pay their head person or management. Even if they are small they take some pay to cover thir time while they get others to give their time for free. I know some NPO founders that pocket over $500,000 a year for nothing. Unlike for profits, NPO don’t give their money back to investets they just give it back to the founders as a “salary”.
Lars
on 23 Sep 10The majority may be doing excellent work, but again, how does that justify a discount?
Excellent work isn’t what justifies a discount. What justifies a discount would be the belief that there is more to the meaning of value than just that which can be quantified in a dollar. If you’re willing to accept the idea that the best place to live in the world is not the richest, then you probably already believe this to some extent. I’m sure you have opinions about local parks, national parklands, mountain views, clean oceans and clear skies, even though those things are virtually unquantifiable if you believe that value extends beyond money. If not, then you’ll find the rest of this boring.
What I see in this debate is the tension between determining value only in economic terms and trying to harmonize that with value that isn’t measured in economic terms. I also see what Mill’s critics pointed out, which is that some people derive their pleasure not just from money or straight happiness, but from other people being put out (schadenfreude).
Sure, you’re product is definitely worth money to a business. Because a business deals with money and value in purely economic terms. But to a non-profit, it may be worth something different—something where “more” or “less” are measured in terms of an outcome for a single family in need of shelter, for a region without an adequate water supply, for a dog being given an extra week to find an owner before being put to sleep, et cetera. That has a value, right? What is that value? In our economic system, it’s value is nothing because it contributes no direct economic value.
I think what I and others are reacting to is the fact that rather than saying “this is our price and it’s final,” you’re saying that, in your business’ eyes, all work has relatively the same value to us over all and we don’t want to get involved with making value judgments. Okay, fine. Totally your prerogative (H/T Bobby Brown).
But then what goads me on is that you didn’t actually say that either, because after you instigated this weird discussion about value of NGOs vs Business, and how you weren’t going to get involved in all of that (spinning off that very discussion in the comments) and how you’re pricing is simple and low, you admitted that you do have variable pricing that depends on the client. And the simple price that you see on the site isn’t necessarily the price that you’ll necessarily have to pay.
Perhaps a better way to have delivered the post would have been to say, “We’re mostly pricing agnostics. We like non profits. We like for profits. We keep our prices low. We sometimes make exceptions on a case-by-case basis. Talk to us and maybe we can do something. Generally we won’t, so don’t get your hopes up. “
Heath
on 23 Sep 10I think this is being made into a more complicated subject than it needs to be. Offering non-profits a discount is nothing more than making a donation. If you offer a $300 discount to a non-profit, it is the same thing as donating $300 to them. That’s it, nothing more. Them asking for a discount (aka a donation) is what non-profits do. You can either agree to donate or not.
Somehow this debate turned more into political opinions about non-profits and how effective they are. If you believe your donation will help out our society, then feel free to discount your product. If you don’t, then don’t. Nobody is making anyone do anything here.
Don Schenck
on 23 Sep 10About 40 posts up, Sarah Hatter NAILED it. Did anyone even bother to read her post?
Sheesh.
Conor
on 23 Sep 10@JF raises a lot of interesting and completely valid points/concerns. However, the biggest distinction not noted is that are the expectation and speculation on how the budget is being spent.
For profit business are expected to get the job done regardless their size. As a client, one does not choose their business on how efficiently their provider runs their business. What matters is quality product/service. Business management tools are necessary features.
Its the business owner’s own prerogative to keep expenses down, so his/her bottom line is better. Understandably, they may feel pressure from stock/shareholders, but in the end, for-profits do not get a stamp of approval for qualifying their work. The quality of their product/services that determine their success.
The distinction, as @James notes, is that charitable organizations get rated on how efficiently they spend their funds. At minimum, 80% of the overall budget must be spent on the “exempt cause” in order to be considered the highest rated or 4-star organization (the general public looks for 90%+). This leaves at max 20% of the budget to cover all salaries, rent, anything administrative, and all other overhead. NPOs are subject to public speculation on every dollar spent, something small, private businesses dont have to deal with. If organizations score poorly, it will affect their future donations and grant eligibility each year regardless of how amazing their services are.
As a parallel aside, in my experience, many of the individuals who think organizations shouldn’t get a discount also scoff at a CEO of an NPO receiving an $80,000+ salary no matter how successful the organization. The concern being, where is my donation money going? Most donors want the majority of their organization to use their gift for the exempt service. Certain products/services may enhance the overall service, but are still on the books as an overhead expense.
To @SH : There are different classifications of 501©(3) that differentiate charitable organizations from large foundations and places of worship. Maybe giving discounts to organizations similar to charity:water is something to consider? You can write-off the difference as a charitable donation.
All of that being said, I would love to purchase your product someday for the charitable organization that I run. I admire the work of 37Signals; your business mantra has been guiding my organization ever since I discovered your products. Until, we get more participants, your rates fit our budget, or someone like @Victor_P donates a subscription to your service, I will have to wait.
@JF I run a startup, charitable NPO in Chicago. I would be glad to discuss the challenges and needs of charitable organizations over tea.
Flat for all
on 23 Sep 10So you’re for a flat income tax as well?
Joshua Dance
on 23 Sep 10I agree with both sides, however, I don’t think that sweeping generalizations can be made.
When it costs an estimated $10 dollars to save a child from malaria, if 37S offered a half off account to that NGO, that would be 1 extra child per month.
However, the nonprofit to help american dog owners care for their pets… not so much.
In the end, it boils down to the fact that some NGO’s are doing essential work and need all the support (read free and reduced price services) we can give them. Others don’t really need it.
Stephen
on 23 Sep 10I see the author’s points. They are valid, and 37s has every right to this method of doing business.
However, I feel more of a connection and loyalty to businesses that give back to the community in some way. I think it would benefit both 37s AND many non-profits if 37s decided that they would benevolently offer lower prices to non-profits.
I have recommended 37s to many other businesses over the years, including some non-profits that we support. We currently buy monthly Basecamp access for a non-profit who helps represent children in the court system. When they needed to upgrade to the max plan to manage their cases, we did contact support/Sarah at 37s and asked for any sort of lowered price as part of a donation towards good works on 37s’ part and were turned down.
Again, that is fine. But where is the benevolence, or business relationship smarts, when a company won’t donate or provide a price break for a web account to a non-profit that one of your $2,976 a year customers is supporting? (That ~$3k figure is before we pay for the non-profit’s basecamp account.)
I have nothing against making money—but just as we donate our legal services to worthy causes, I want to see businesses I work with doing their part in the community.
37s makes some great products that I enjoy using and recommending, but I have a bad taste in my mouth from the way you handle non-profit accounts—even more so after reading this post.
Anonymous Coward
on 23 Sep 10However, I feel more of a connection and loyalty to businesses that give back to the community in some way. I think it would benefit both 37s AND many non-profits if 37s decided that they would benevolently offer lower prices to non-profits.
How about Rails? 37signals open sourced Rails which has created an entire economy of people who can now create their own software, businesses, and profits (which they can contribute to others, if they’d like).
Rails is used by many in the non-profit world to power their web sites and membership back-ends. Entire careers are built on the back of Rails. There is a lot ore opportunity out there for a lot more people because Rails exists.
37signals employees have contributed their own projects to open source as well. 37signals as a whole is a very giving bunch.
Charles Rapson
on 23 Sep 10I agree, ‘not for profits’ should not assume special prices. We don’t. I run two ‘not for profit’ social enterprises in the UK. Waterloo Woodwork provides work experience and training for people with a learning disability. Colebridge Communications provides print, video, web, exhibition and other communications services. Profits are reinvested and used to provide support services to charity, voluntary & community organisations.
Sure, we get discounts but not for charitable reasons; only commercial. Suppliers who want our business.
But it works both ways. The percentage of customers who expect us to be cheaper because we are ‘not for profit’ is very high. Many of our customers are businesses themselves – private sector. We’ve stopped using the term ‘not for profit’ in publicity and refer to ‘social enterprise’.
So, we will not ask for a ‘charity’ discount if others don’t expect ‘charity’ prices.
All in favour of a level playing field.
Anon
on 23 Sep 10Yeah, fuck those charities, that money can go towards my custom car, not their charitable goals!
I agree that it’s crappy to have different prices for different people based on their negotiating skills. But if this is for a not-for-profit charity to serve homeless people/rescue animals/save the environment/whatever, vs a for-profit business to pay for hookers and blow, then I don’t what see the problem is. Think of your full-price customers as subsidizing the charitable organizations.
JT
on 23 Sep 10Yes, and for every “custom car” there is a team of people that make it, their families, the owner, etc. They all get to pay the expenses for their families because of “that” order.
Whereas if you donate what you have to charity, you typically fund a flawed system, where who gets what and how is something you cannot control.
Stop bashing people for working fairly and spending their money on other people who work fairly too – pay taxes, salaries, etc. None of the “non-profits” does that.
Anonymous Coward
on 24 Sep 10JT is obviously a Republican. Hurray for me fuck everyone else. Obviously anyone born with a disability or suffering from something that he could never comprehend are slackers and should just be put to death so he can have his “custom car” and support those families that build them. Seriously? I hope you get cancer and max out your 2 million dollar health insurance cap. Don’t come look for help from the “flawed” non-profits to fill in the gap when you have to cash out your 401k and sell your house.
JT
on 24 Sep 10In a world where resources are limited, every “charitable” effort limits your abilities to help elsewhere. It is really not that simple.
If you spend too much on charity, you will not be able to hire THAT employee that supports her autist child, for example.
Then again, I would still support charities and non-for-profits, if I was sure the money spent REALLY went where it is needed. See, for me, it is much better if I just make the paycheck and spend the money DIRECTLY to help someone (just one guy, if everyone does it – it will be great). Non-profits with CEOs, boards, BMWs, etc, do not help me do that.
Ellie
on 24 Sep 10Thank you Jason- here at Fpweb.net we could not agree more, yet have never found a way to put this so eloquently!
It is important to remember that we as a company still have the power to choose where our charity efforts are divided.
Please read our President’s further comments here: http://blog.fpweb.net/power-to-choose/
Conor
on 24 Sep 10This is the very reason why charities ask for discounts, so they can spend more of their money on the cause they are supporting.
Chris Reich
on 24 Sep 10This is a thoughtful post without being too heavy handed. In the end, we have to decide how far to go with our generosity.
I deserve to make a living from my work. I also try to assist others and those ‘others’ are not necessarily charities. I have helped businesses that were struggling and turned away non-profits that I didn’t wish to support.
I have no stated rule for various categories of buyers. I consider each situation and the value I will deliver. In some cases, if I am producing a return for a non-profit I believe they should pay for what I’m doing.
Because I might choose to give away my time does not mean that you owe me your service or product for free or at a discount. Key word is ‘owe’.
Chris Reich TeachU.com
Marc Gayle
on 25 Sep 10Normally when I read one of your posts that I agree with, I nod, smile and move on.
But then I realized that the vast majority of your commenters are likely to disagree with you so I figured I would chime in.
I couldn’t agree with this post any more.
While I agree that some causes are worth supporting, it makes life easier to have just a standard policy (e.g. 10% off for all non-profits or no discount).
Many people will see this as being ‘greedy’, but that’s short-sighted and ignorant in my view. The reality is that most non-profits have to find money to pay for some things (electricity, labour, etc.), so if they really want to use your product, they will find a way to pay for it.
I am not saying I would pursue your policy, but the beauty about it is that it is your policy. You are free to make and enforce it as you see fit.
Good for you.
Derek Scruggs
on 25 Sep 10I’m not arguing the policy, but to Sarah’s point: the reason you get 3,000 requests per year is because your policy differs from a lot of other companies. If you had a clear nonprofit policy on, say, your checkout page (something I’ve done with other companies), you’d get fewer “do you offer this?” inquiries and more straight-up purchases, though discounted.
JC
on 25 Sep 10Appreciate your post Jason, and I think it is spot-on. Non-profit is merely an IRS designation and a myriad of organizations fall under it. To offer a blanket pricing differential just because of an IRS designation shouldn’t automatically be seen as reasonable or appropriate.
I imagine some of the people disagreeing with your position might change their mind if they dug more into the list of nonprofits and took a look at their balance sheets.
Concepx Studios
on 27 Sep 10I have spoken these same words to colleagues and business partners in the past, present and will continue to do so in the future. I agree whole heartedly in what this post states in its specific reasoning and expand my thinking to encompass all other scopes.
I also add that the same perspective be taken by others more, regarding pricing of products and services to peers.
Everyone should pay the same fair price or fee for the same fair service or product. We are all in our respective business’ to turn profit (no matter how that profit is used) and we are all facing the same struggles daily, whether we run a multi-national company or operate a one man operation from our basement.
The size of the business or how much profit they can turn for themselves, does not matter in this respect and therefore cannot be a devining or defining factor that sets pricing.
Discounts, price cutting and matching, etc, are at the discretion of the service/ product provider and determined by their reasoning. It should not be the responsibility of a service provider to offset by slashing their pricing to suit each individual pocket or situation (unless that situation is of some unique nature and this should be very rare) .
Here, Here!
Jessica
on 27 Sep 10I’m the CEO of a mid-size non-profit, and while I actually agree that non-profits and for-profits should have the same pricing structure, until something changes in how the rest of the world views our administrative expenses, we are all still going to push to find ways to keep our administrative costs low.
As others have pointed out, we are expected to keep our administrative costs below a threshold of 20-25%, and we become ineligible for funding from a number of sources when we surpass that level. The focus is on minimizing our administrative costs, not optimizing them.
That short-sighted thinking from funders and some donors and boards of directors often keeps non-profits from investing in tools that can help them expand their services, improve the quality of the programs they deliver, and in general just deliver better on their mission. Which makes no sense given the fact that a non-profit’s purpose is to deliver on the objectives set forth in its mission.
The subject of administrative expenses is a controversial one in the non-profit world (just ask Dan Pallotta). The way you might be able to help non-profits the most is not by giving us special pricing, but by helping us to create a cultural shift in how the world views our admin costs.
rogers
on 28 Sep 10I think non-profits is nothing more than a some-what arbitrary price discrimination strategy. (For the benefit of those not familiar with the topic http://en.wikipedia.org/wiki/Price_discrimination)
If “on-average” NPOs have less money to spend, and FPOs don’t feel cheated, it is probably an okay price discrimination strategy.
But why do you feel the need to justify your price strategy (to the whole world)?
How is this post in the best interest of sales (or sales leads)?
Meaning, do you think that this post could piss off some NPOs that might have otherwise contacted you?
Do you think others will like the post (the Saturn buyers) and be more likely to contact you?
This discussion is closed.