How can a nonprofit, in good conscience, follow a premium pricing strategy?

Question

How can a nonprofit, in good conscience, follow a premium pricing strategy?

Answer 1

being nonprofit doesn't mean that they don't bring in money and try to bring in really big money. What is the difference between running a business for profit and running one for nonprofit. In a since very little. The difference is that a company for profit has a owner or stock holders and they are looking for a ROI (return on investment) while a nonprofit isn't owned with the idea that they are going to make a profit, but remember that the folks that work there still have to be paid and the CEO maybe paid $100,000 plus a year but there is no profit sharing for anyone.

Answer 2

Managers of social enterprises may be conflicted about following a premium pricing strategy, knowing that, by doing so, some of the very people they are trying to otherwise serve with their larger mission will not be able to afford their social enterprises’ products or services. Yet, some social enterprises lend themselves to premium pricing strategies, as they are generally offering something more than “just” a product or service – they are offering a product or service PLUS a mission.  This presumes that if you are in a highly competitive market you can successful differentiate your product/service and properly segment and reach your customers (e.g. premium-priced holiday cards from UNICEF with focused distribution at outlets to reach targeted customers).

If a premium pricing strategy makes sense for your business, but you still want to insure that lower-income individuals will be able to afford your products and services, you likely want to follow a common strategy called “price discrimination”. True, this sounds ugly, but it is nothing more than getting different customers who value your products differently – or, in this case, have different abilities to pay – to pay different prices.  Coupons distributed to targeted segment for discounts may be one method to pursue (more below).