The Fairness Fallacy: Why Uniform Pricing Holds Your Mission Back

Pricing Pointers, Issue #41 🍎

The last issue of Pricing Pointers was about the psychology of value perception; this issue is about the equity of its application. I’ve selected five of my past LinkedIn posts (similar to Substack notes) that examine the hidden costs of uniform pricing. Whether you are trying to capture more value in your business or expand the reach of your nonprofit, these insights explore how “fairness” actually works in practice.

This collection challenges the common, but mistaken, belief that fairness dictates charging everyone the same price or fee. Below, I’ve organized these insights to show how a differential pricing strategy can be a tool for increasing the economic diversity of your users, the captured value of your services, and the financial sustainability of your work.

Here they are:

1️⃣ Stop making pricing decisions based on a false choice

Most small business owners fall into the trap of asking, “Should I price higher for more margin or lower for more sales?” That question is fundamentally flawed because it guarantees you will leave money on the table.

The secret isn’t choosing a single price point. It’s understanding that different customers value your product or service differently. A single price serves only one segment of your potential market.

The belief that you must settle on one particular price might be the single biggest profit killer in small business.

You can charge different buyers different prices for the same (or nearly the same) thing. You can also charge the same buyer different prices for the same thing. And you can do it in ways that don’t leave your customers with a sour taste in their mouths.

2️⃣ Is charging everyone the same uniform fee truly the fairest option for your users and your mission?

A uniform fee assumes all users have the same ability and willingness to pay.

We know that isn’t true. By sticking to a single price, nonprofits often unintentionally limit both their revenue and their reach.

Differential fee tactics allow you to generate more revenue without compromising your mission.

The bigger question is not if you should charge different fees, but how to do it ethically and efficiently.

3️⃣ Should your nonprofit start charging a fee for one of its services?

Here are 5 tips to help you decide:

Tip 1: A fee is more than a price; it’s a problem-solving tool. What are your reasons for charging a fee? What objectives will charging a fee help your organization achieve?

Tip 2: You don’t have to charge everyone the same fee. You can help budget-conscious users or clients by offering discounts to just them or lower-fee options available to everyone.

Tip 3: You don’t have to charge everyone a fee. Not only do you not have to charge everyone the same fee, you can charge some users or clients nothing at all. “Free for some, but not for all.”

Tip 4: If you can’t exclude people, you can’t charge them a fee. You must be able to prevent people who are not willing to pay from using your service or product for free. If you can’t do that, see Tip 5.

Tip 5: If you can’t charge a fee, you can still ask for a donation that acts like a fee. If there’s an economical way to collect it, consider asking users or clients to pay what they want. (That includes nothing at all.)

4️⃣ A Simple Way to Boost Your Nonprofit’s Revenue

Looking for a simple way to boost revenue without a lot of additional overhead? Consider implementing a Pay-What-You-Want fee.

It’s the least expensive option to implement and allows anyone to pay what they want (or can), including $0. Think of it as a looser version of a sliding scale fee where you don’t verify the user or client’s ability to pay.

It’s an especially useful approach to take when it’s physically impossible to exclude nonpayers from accessing your services. When you can’t act as a gatekeeper, or it’s not economical to do so, you can still invite a contribution at the point of access or delivery.

⭐ Bonus tip: Include a “suggested” amount to increase your chances of receiving higher payments

5️⃣ You’ve heard of raising fees. But what about adding a more expensive option to benefit everyone?

A higher-priced tier for those who want more can generate surplus revenue that you can use to subsidize services for those with less. It’s a simple, powerful way to increase program inclusion and sustainability.

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