Social Currency

Note: This post originally appeared on NFF's blog at the Chronicle of Philanthropy.

When nonprofit groups set prices for their services, they are often encouraged to follow models set by businesses. But is this the best approach for all organizations?

Recent news articles on nonprofits and pricing—and conversations we have here at Nonprofit Finance Fund about our pricing structure—have brought home the point that pricing in the nonprofit world is actually much more nuanced than in the business world.

In a June Stanford Social Innovation Review blog, Rafi Mohammed, a consultant who works with businesses on pricing strategies, recently provided some guidance. Mr. Mohammed encouraged nonprofits to base their pricing on the value of the services they provide rather than on what it costs them to provide their services. He also encouraged them to incorporate differential pricing into their strategies — offering lower costs for clients who cannot afford higher prices.