Setting fees and pricing can be an incredible challenge – whether you are a small business, a department or part of a larger sales organization, there are different ways to organize and deal with pricing and they all have various advantages and disadvantages. Just one way of pricing is to consider offering fees or prices on a “sliding-scale” basis. What this means is that there is a set range of prices, and depending on the individual’s resources and/or ability to pay, each person may pay the low-end price or, potentially, the high-end one (or somewhere in between.)
Sliding-scale fees are often found in nonprofit and human service organizations where individuals are able to pay for services based on how much they can actually afford. There also seem to be some other businesses and industries that are better-suited for sliding-scale fees than others. For example, some therapists and counselors may use this type of payment structure to better serve the needs and resources of a variety of clients. Performing arts such as drama and dance classes may also offer the classes on a sliding-scale price basis-it is up to each individual using the services to negotiate the price that works for his or her budget. As predicted, this type of pricing does require some negotiation between the business and the client or customer. With the traditional set price or fee with no variation, customers and clients either pay the established price or they don’t. When it comes to using a sliding-scale fee, each business-customer relationship requires a negotiation to come to the appropriate amount. The other option is to allow the client or customer to be on the honor system and hope that they pay a reasonable amount within their means.
In choosing to use this type of payment system, there is a need for some research and investigation to determine what is the minimum amount that is needed to cover the costs of time, services, or the product’s value. This ensures that even if a customer or client pays the lowest end pricing at the lowest end of the scale, it is still possible to at least recoup the expenses and pay the wholesale pricing. The intention is then that those who pay at the higher end of the sliding-scale will help off-set some of the difference with those who pay at the lower end. It is important not to under-cut the pricing on the low end, however, hoping that there enough higher-end paying customers to bring the average up. Make sure that every customer or client at least pays “cost” for the service or product.
