Do you provide serves non profit businesses? Did you know that non profits are not necessarily organizations whose main purposes is being a charity or serve a public interest? Did you know that being a non profit simply means that there are no shareholders expecting a return on their investment and that what might have gone into profit may be paid out in high executive compensation and perks so there is no profit left to distribute? Did you know that non profits pay no taxes there is a very low threshold as to how much money must go to the entity that is a charity or serves a public interest? Many of these organizations have in fact come under governmental scrutiny as a way to dodge IRS taxes.
Although some non profits are indeed poor, many are not. However many firms dealing with them think that non profits operate at very low cost which has led vendors that work with them to provide services at a discount instead of doing business at market price. I often I hear that “we can’t charge them our normal price, they are a non profit” when non profit and ability to pay are no connected. The fact is that being a non-profit may have nothing to do with their finances or their ability to pay. If you want to make a donation to your non-profit client, that is all well in good and can be done as a true charitable donation rather then discounting your service, which will reduce your normal business margins.
By providing your services at a discount may result in opportunity loss. That is doing business at a higher profit if you are at capacity limited in terms of either the services your provide or those people that service that account (i.e. Sales Reps.) and their commission as well. How much you decide to reduce your process by servicing a non-profit should be no different the making a pricing decision for any other account unless you consciously decide to do this and not because they can’t afford it.
We welcome your questions as to the challenges you face in order to grow.
To see all articles in this series please go to http://optimal-mgt.com/blog.
