3 Smart Fee Strategies to Boost Your Nonprofit's Revenue and Reach
Pricing Pointers, Issue #14 š
Revenue or Reach?
Charging its users/clients a fee improves a nonprofitās financial sustainability. On the other hand, charging a fee can prevent some users/clients from accessing the nonprofitās programs and services.
Many nonprofits assume they only have two choices: Charge every user/client either nothing at all or a uniformly low fee. The good news is, you have options that can unlock new avenues for both financial health and mission impact. Here are three of them:
1 - Pay-What-You-Can (PWYC) Fees
Pay-what-you-can (PWYC) fees allow individuals to pay any amount, including $0. Itās like a voluntary fee.
It's ideal when your organization canāt prevent non-payers from accessing your service.
Including a "suggested" amount with your PWYC request can increase the likelihood of receiving higher payments.
It is generally the least expensive model to implement. The main concern is securing payments at the point of collection.
2 - Sliding Scale Fees
Sliding scale fees adjust the fee thatās charged based on a criterion selected by you.
This may be income, but it could be place of residence, age, student status, etc.
The easiest way to implement this model is to let users self-report their eligibility for a lower fee.
Verifying eligibility for a particular fee adds to the administrative expense, but may also result in collecting more fee revenue.
The lowest fee level could be $0 or āfree.ā
3 - Tiered Fee Menus
A tiered fee menu gives users two or more options at different fee levels that any user can choose. Each user then selects the option that best suits their needs and budget.
A tiered fee menu can increase your revenue because it gives users an incentive to pay more.
And it can also increase your reach because it provides every user with the option to pay less.
Adding a $0 or āfreeā tier to your fee menu is another way to help your most budget-conscious users.
Balancing Revenue and Reach
Financial health and mission impact are not mutually exclusive.
By embracing these flexible fee strategies, your nonprofit can indeed expand its revenue while simultaneously protecting your reach and impact.