As my company grows, so do the requests for nonprofit discounts. If you are in the business of digital content creation, then you probably get a lot of requests for free and discounted services.
At my agency, requests for discounts based upon nonprofit status are always met with “no”. We even get ahead of this question by answering it in advance on our FAQ page.
I’m confident about that decision, but I didn’t always feel confident saying “no.”
The first time I heard the words, “Do you provide a discount for nonprofits?” I thought, “Why on earth would I do that?” Then, I wondered, “Am I supposed to be giving nonprofits discount pricing?”
I didn’t know the answer. So, I felt obligated to reduce my price whenever someone pulled out the nonprofit card.
It didn’t feel good. I felt resentful as I worked on their project. They probably didn’t get my best work.
Before I talk about how I finally decided to say no to discounts, let’s look at the idea that nonprofits automatically deserve a discount because they’re doing something for the larger good.
I like what Jason Fried, Co-Founder of Basecamp, once said:
“Some might say that nonprofits 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.”
You may be surprised to know that I do provide pro bono services for both for-profit and nonprofit organizations that support causes I really care about. I often offer these discounts without being asked.
But, nonprofits don’t have exclusive status when it comes to doing good or benefitting their communities, and so they don’t automatically deserve a discount.
When I busted the assumption that nonprofits deserve a discount just because they’re nonprofits, that helped.
But, how did I go from saying yes every time someone asked to confidently saying no?
I realized I was saying yes not because I thought that nonprofits deserved a break for doing good in the world.
I was saying yes because I had no confidence in my pricing.
I had to feel confident in my pricing before I could learn how to say no to a discount request.
Here’s how I got clear on my pricing.
First off, just because my prospect confuses me with a donor doesn’t mean I have to accept. The missions of my nonprofit customers are not necessarily aligned with mine.
After all, if I set my rates according to my personal interest in another company, then my client who sells spark plugs would pay a lot more for my services. I couldn’t care less about spark plugs!
Once I realized that there was no connection between nonprofit status and the pricing of my services, I evaluated my goals.
- Am I trying to be less expensive than my competitors?
- Am I running a profitable business now?
- How much do I need to make from my services?
- How much do I want to make?
And I thought about how I wanted to work in order to achieve those goals.
- What is important to me in my client relationships?
- Does the nature of my customer’s business matter to me?
- Do I want to make my services affordable to everyone?
Thinking about and discussing these questions gave me some clarity around my pricing.
Here’s what I determined about my agency’s overall pricing as it relates to discounts for nonprofits:
1. I want to be fair to my clients.
Fair means being consistent in my pricing. About 15 percent of my agency’s clients are nonprofits. If I create special nonprofit pricing, guess who has to make up for the loss in revenue?
It’s the for-profit clients who pick up the tab. That just isn’t fair.
So, I’m consistent with my overall pricing structure.
2. When someone is paying me less, then I am tempted to give them less.
They get less attention and become a lower priority. I treat people inconsistently when I charge them different amounts for the same services.
Bottom line: Inconsistent pricing is bad business.
Requests for discounts are requests for DONATIONS. Knowing the data and values that inform my pricing structure gives me the confidence I need to be consistent in my pricing.
Comment or ask a question below.
When giving to non-profits we look for win-win situations, where it makes sense to give to the non-profit. In our business we are asked for donations from non-profits almost daily. The answer is not always no. But how do we pick? There are some boundaries that help us stay consistent with our giving. 1 – If the non-profit is requesting for us to donate our product directly for them to serve alcohol at an event, the answer is always a hard fast no as the consumer is not face to face with us. 2 – If the non-profit is requesting for us to donate silent auction items, the answer depends. Is this one of our loyal customers requesting for the donation for something they care deeply about? Then yes no questions asked. We would love to keep that customer loyal to us while driving business into our doors. We give silent auction items that are experiences which must be enjoyed within the walls of our business. If the requestor is someone walking door-to-door, while we greatly appreciate the non-profit work they are doing, we must say no as we have too many requests to be able to give to all. This way we ensure our giving is aligned with what our loyal customers believe in.
This is so good. There’s a lot of nuance in making the yes/no decision. Sounds like you’ve put a lot of thought (and experience) into your process.
That’s the key. When you say, “no” then you know your reasons. It’s not just a reflex. That’s confidence.
As Becky Ross says, It’s just a matter of being very selective of what kind of non-profit you are going to donate your time and effort. And as your business is growing and being successful, once you have carefully selected the non-profit that aligns with your values, then hey, I wouldn’t even charge for my services and I would serve them with the same quality as I would for a paying client.
I recommend this reading. “Win Without Pitching Manifesto” by Blair Enns. In which he teaches how to price creativity, how to charge even more to regular paying clients and why give work for free to a non-profit.
Hi Augusto. Yes, I have a tendency to just do things for free. But, I don’t have a system for making that decision at the moment. I will look for Blair Enns’ writing.
Thank you for this post. I love the honesty.
In (28) years, I can only remember a few who asked for a discount, but only (1) that was a known non profit. Emily, I own my small business. I don’t ask people to come down in price. I know how it feels.
And, when someone did ask for a discount, my first thought was that it wouldn’t be fair to everyone else that paid full price. ( Even knowing that they’d never find out. )
I’ve also told my clients that people hire them because of them. I congratulate them on that.
Hi Dan, Yeah, I am one to not ask for discounts for the same reason. I don’t know of any small businesses that are price gouging. I know they are giving me their best price.