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What can charities learn from dynamic pricing in the commercial sector?

(or how charities can boost the desire to give and the appeal of their cause)


This is the first in a series of blogs looking at ideas from sectors other than charities, and see what charities can learn from them. If you have any ideas that you’d like explored get in touch (joe@heyheyjoe.info )

 

Dynamic Pricing is the idea that prices of a product or service are changed in order to reflect the demand for it, and so moderate that demand. In reality we are all familiar with dynamic pricing in areas like hotels, plane tickets, Uber rides or Airbnb and the like. The prices are more at popular times – school holidays – and cheaper at quiet times in the middle of January. Reducing prices should fill a hotel at a quiet time and increasing prices, make more income at busy times.

 

The interesting thing for this blog is to ask how the ideas of dynamic pricing could be applied to fundraising for charities.

 

At first sight it seems to be difficult to use dynamic pricing for fundraising. The reason that dynamic pricing doesn’t work is that charities are mostly selling a service. ‘If you give us money, we will do some good with it.’ There is no reason why the cost of that ‘doing good’ should be changed by the time of day, or day of the week. Indeed it would be positively distasteful to have an offer which went ‘this month we can save babies at half our normal price’ or ‘its an emergency in Ukraine, so saving babies is twice the price.’

 

But with a bit of unpacking there are a number of ways that charities can alter supply and demand to raise more funds.  

 

First of all we need to tweak the language – supply and demand don’t work very well for making a donation. I’ll replace demand for a service with the appeal of the cause to be given to and replace supply of a service with the desire to give by somebody.

 

How can charities increase the demand or appeal of their good work? What changes somebody’s desire to give? Here are a variety of ways that charities are already using changing levels of desire to give, or changing the appeal of a cause.

 

The secret to increasing the desire for people to give, is to accept this is nothing to do with how good the charity’s work is. It’s about removing the barriers to giving, change the perception of what a donation will do, or leaving the individual feeling empowered. Here are some ways to change desire, and then changing the appeal.

 

Changing the desire to give

1. Change the size of the donation prompt. This is the closest fundraisers get to dynamic pricing. Increase or decrease the amount asked for, while all the time being vague about exactly what a donation will do. £10 could make a real difference to our work, is no different from £15 or £20 in the promise it makes, if the language is correct. People may give because a lower amount may make them feel their donation will go further - £3 can save a child’s life is ethically dubious, but an effective fundraiser.

 

2. Remove donation uncertainty through guarantees. The commercial sector gives guarantees for both product sales (now with a 3-year guarantee) and service delivery (your satisfaction guaranteed). I have seen charities do the same – if you aren’t entirely happy that your donation has made a real difference, we will give you your donation back. The appeal hasn’t increased, but the barriers to a desire to give have been reduced.

 

3.  Go viral to increase desire (if you can work out how to go viral). The next way to increase donation levels is to increase the desire to give by suddenly making giving go viral – get lots of people to talk about it, be aware of it, and ultimately make a donation. The Ice Bucket challenge is a good example of this. Everybody was pouring water on themselves a few years back. This was nothing to do with appeal, and everything to do with the desire to do the challenge. Most people probably had no idea what they were raising money for.

 

4. Create desire to give through (time-limited) matched funds. The Big Give has successfully used time-limited match funding to increase the desire to give. They are not the first. The government overseas development dept have used matching fund in recent years, to encourage public participation in DEC appeals. It increases desire by making people  feel their donation does more good. Gift Aid sign ups can have the same effect.

 

5. Lock in desire to give, through continuous payment.  Perhaps the best way to boost the supply of donations is to ask once, and then get donations for ever after. Direct debits and standing orders do this, so do continuous card payments such as Stripe. There is no better way to lock in the desire to give by only need to get it once  (and the commercial world is catching up with subscriptions products such as Hello Fresh for fresh produce, and Harry’s for razors).

 

Change the appeal of the cause

6. Create appeal through emergency appeals. There is no doubt that humanitarian emergencies create additional need. The invasion of Ukraine raised millions in donations. Charities can’t create humanitarian emergencies, but they can create a sense of urgency by emphasising shortage of funds, or a specific need.

 

7. Create appeal by demonstrating impact. Strangely this is a controversial item to include in this list. While there are organisations like NPC who spent a lot of time saying how important demonstrating impact is, in reality I think its not that clear that demonstrating impact makes a big difference to fundraising. It probably does to grant-makers and major donors, but the average donor, I fear not.

 

7. Build a better clearer brand. Another way it is possible to increase the appeal of a cause is to improve its brand – better messaging, inspiring strapline, memorable visuals, and uplifting vision – all contribute to the clarity of why an organisation needs donations and what it will do with them.

 

Charities can change the appeal of their cause, and the desire to give. It’s obvious looking at this list that there are more ways to alter the individual’s desire to give, than there are ways to increase the appeal of the charity’s cause (which is a touch ironic).

 

Fundraisers need to appreciate that these are two separate elements, and while analogous to supply and demand, they work in a different way. The best fundraisers do this without realising. Done right increasing desire to give, and boosting the appeal of a cause, makes a big difference to the level of funds raised.

 

 

 

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