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Pricing for Social Entrepreneurs

November 2, 2010 by Dale Furtwengler — President, Furtwengler & Associates, P.C.

In order to do good...

...you have to do well.

I recently had the good fortune to speak to a group of entrepreneurs affiliated with the Center for the Advancement of African-American Business. A number of the members had created 501(c)(3) not-for-profit organizations in addition to their for-profit businesses. Why this dual arrangement? They wanted to increase the number and quality of opportunities within their communities.

These laudable goals were hampered, however, by poor pricing models. Many of these business owners, in an attempt to help the disadvantaged in their communities, priced their offerings so low that they are barely making ends meet. This scenario isn’t limited to the African-American community. I’ve seen it played out time and again in a wide array of ethnic and religious groups of all sizes and geographic location.  

The old adage that you can’t take care of others unless you’ve taken care of yourself is so true, as these social entrepreneurs were discovering.  

It’s counter-intuitive, but your ability to lead others to higher levels of accomplishment requires you to demonstrate the ability to achieve great things yourself. In business, that means creating and growing a profitable business.

The keys to success for social entrepreneurs are:

In the for-profit business:

• Identify your ideal customers - those who value what you offer enough to pay for that value.
• Price in accordance with the value you provide.
• Communicate that value in your marketing messages so that you attract those who are willing to pay your price.
• Quantify and communicate your value in the sales call so that buyers can make an informed decision.
• Indicate in your marketing materials that a percentage of your profit dollars are going to your not-for-profit entity and the mission of that entity.
• Highlight one or two success stories of your not-for-profit organization.

In the not-for-profit organization:

Don’t assume that because someone is less well off than you (your definition) that they want their lives to change. Many people on a lower socioeconomic scale than you are quite happy with their lives.

Require those seeking assistance from your not-for-profit are willing to contribute time, talent or other resources to help others while gaining the assistance they need. If they’re not willing to commit to some form of exchange, they really don’t value the assistance you’re offering.

Use your success and the success of those who’ve received assistance to expand the resources of your not-for-profit so that it’s not completely reliant on your for-profit business.

I admire these social entrepreneurs. I hope these tips will help them and the communities they serve enjoy greater success.

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