June 2, 2025

“If you use hourly rates with non-profits you’re toast”

Fellow list member Joe Garecht replied to Does value pricing work with small non-profits? to share his experience with pricing for non-profits (shared with permission, bold mine):

Jonathan,

My primary business is nonprofit fundraising consulting. I have been in the business for 25 years. I can tell your reader from personal experience that you can not turn a profit serving nonprofits raising less than $500k-$1 million per year. But just as business consultants can use value pricing and make a profit serving $1 million+ revenue small businesses, you can make a healthy profit serving nonprofits raising over $1 million per year. And you can absolutely use value pricing to do so, In fact, for nonprofits, if you use hourly rates you’re toast, because the people there hear $200 an hour and they think it’s outrageous, as they may only be making $50 an hour. BUT if they hear “a new major donor program could help you raise an additional $250,000 per year by year 2. We charge $3,500 per month to build this program for you,” they think it’s a steal.

Joe

The point about the buyer comparing the seller’s hourly rate to their own is a good one.

If you’re billing by the hour, and your buyer is getting paid by the hour, it’s too easy for them to compare the two numbers and get anchored to whatever they’re making.

So Joe’s approach to anchoring his fee to the desired outcome, rather than an hourly rate, is exactly right.

Thanks to Joe for sending this in!

Yours,

—J

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