Cost, price and sustainability

A business adviser in the East of England - a former banker now working with a range of small enterprises and charities, believes that the private sector is taking the not-for-private-profit sector as a soft touch because we pay the full prices for goods and services they sell us.

 

Negotiating, or lack of it, seems to be a weakness in many social enterprises; a business skill yet to be learnt. We can only assume that negotiation makes people feel uncomfortable - as if being exploited, paying over the odds, is somehow the price we have to pay for being 'a better way of doing business'. But such an approach is not sustainable, and it's also a disservice to the customers for whom every penny we save in outgoings can be invested in improving and increasing our products and services for them.

 

Low prices can exclude 

 

And charging too little is also unsustainable. The traditional view is that low prices = affordability = making the service available to the widest possible market. But Ian Bruce of the Centre for Charity Effectiveness suggests that low prices can, in fact, exclude more customers than they include. He argues that if you under-charge and you go out of business then everyone is excluded from the benefits your business offers.