What to charge?

In order to succeed in business, you have to deliver value at a profit. This post is about our journey to figure out what to charge our members in order to make that possible for Key Bridge. There are three specific ways that may make sense for us. We’re not interesting in advertising or sponsorship type fees even though that may be a good way.


Flat Fees

Either on a hourly, monthly, quarterly, or hourly basis, these fees need to be high enough to comp the work. We're not a huge fan of trading time for money in traditional terms, especially for services that require a lot of expertise. However, it may be the best choice for our members.

Incentive Fees

Incentives fees based on value added results, pay when specific KPI's or milestones are reached you get comp based on that performance. We really like this, but it may mean restricting the membership significantly because of the time needed to devote to deliverables.

Commissions

3rd party fees based on goods and services sold. We have yet seen or run across a marketplace or platform for business development. Would like to create a private supplier base if possible, but we're not keen on commission based fees as it may mean overselling to our members.

Thoughts...

Pricing a product or service is not the easiest thing to do. Sure, if you run a restaurant or retail store, there are formulas to use. If you are building a software company, freemium to start because it’s easy to get test subjects and if the product is sticky enough, you can make it super cheap. Of course, consulting is different and fees are attached to clientele. If you have a multi-national with $25.3 billion turnover, then you can price at $1 million a month, but if you’re working with a $1 million small business, you will price around $10k, depending on what you provide.

Also, b2b vs b2c is vital as well. Selling to individuals is different than selling to institutions. I’ve been guilty of only wanting to work with individuals, because they own, run, work in the institutions; however, the fees payable out of the collective are higher generally on the organizational level. If this was our market then I could see it being easier to price since that would predicate our target market. To some extent this is true with individuals, but needs to be wider of a net for many reasons not having to do with price.

In the end, the choice is really about who we want to work with – individuals or institutions – and that’s what’s going on now before our next quarterly enrollment period. Businesses are started and built by humans, which is our rationale for building a community of people instead of organizations. The other motive is speed of trust. Dealing with institutions can be cumbersome and layered with too much paperwork and red tape. Legally it makes sense, but we want to get stuff done. We’ll see…

JP