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Who pays? (1)

Who pays for what can have a dramatic effect on your work.

Infinite Demand

If what you do is free, and enough people like it, you have a situation of infinite (or as good as infinite) demand. This is fine if you can serve everyone – we all win. Digital products – this blog, things on youtube – are good examples. No-one misses out.

But if your capacity is limited, infinite demand is a problem. Who do you serve? If you could charge a bit more, could you serve more people?

We had a discussion about this today at the charity. ‘Free’ – or rather, ‘we pay’ – was our old model. It was great: we had a long waiting list, and we did good work. But we could only afford to train and equip about twenty teachers a year – on the good years when we didn’t have to shut down operations for a month or so in the summer because we had no cash.

A shift to ‘user pays cost’ (the cost of the materials that they receive, the food they eat during training) means that new users pay for themselves: we can serve as many people as we are physically able, rather than being limited to those we can afford to pay for. We can serve more people, and do more good.

A shift to ‘user pays cost and a bit’ means that we cover our overheads and start to have some space to play with – we can hire new people, invest in new resources that help us improve the quality of what we do, or hire new people to increase our capacity. We serve even more people, and do even more good.

But what about the people who really can’t afford to pay? Do we leave them behind? You might, if you’re not careful. A colleague challenged us about this in our meeting today.

We talked things through, and all agreed that everyone would lose out if we went back to free.

And we all agreed that we didn’t want those with the least to lose out the most.

Reducing our prices isn’t the answer – it makes little difference to those who have the resources to pay. and not enough of a difference to those who can’t.

Our solution: full-price, or free. We price our service at “cost and a bit, and a bit more” as standard – and offer one place in ten completely free – training, materials, meals – as a gift.

I'd love to hear your thoughts and recommended resources...