Sales Challenges and Recommendations for Nonprofits Introducing Paid Solutions

Dignitas, an education nonprofit based in Kenya, led a brainstorming session with other nonprofits at the Impact at Scale Labs to discuss pricing and sales strategies for solutions targeting educators in low-income schools. The session offered insights that can guide organisations offering paid solutions to educators in low- and middle-income settings.  

First, it’s worth noting some discomfort with the language of ‘pricing’ and ‘sales’ amongst nonprofits!  Discomfort is not a bad thing, and it’s healthy to challenge our traditional paradigms. We recognise that language carries weighty assumptions, and so it’s important to emphasise that our conversation about ‘sales’ was very much a conversation about extending impact to new spaces, new people, and new communities, towards the sole bottom line of improving learning outcomes for children furthest behind. 

Contextualising Dignitas' Challenges  

Dignitas introduced the LeadNow app in 2021 as a remote coaching platform for teachers. They piloted it with 3,000 school leaders. Most of the application’s funding came from donors. To reduce their dependence on donors, Dignitas is exploring more diverse sources of income and partnership as part of the growth strategy for LeadNow.  Exploring revenue generation via paid partnerships or subscriptions could enable them to provide more comprehensive solutions and sustain their programs better.  

Despite the potential benefits of this move, they anticipate certain challenges. 

• Technical Expertise: Limited capabilities within the team on business development, product development, marketing, and market entry based on their current team structure.  
• Public Perception: NGOs traditionally provide free services and their audiences expect to not pay for services, thus challenging the acceptance of paid offerings.  
• Regulatory Hurdles: Non-profits face regulatory restrictions on revenue-generating activities. Dignitas wants to avoid compromising its tax-free status and ensure profits return to its programs instead of shareholders' pockets. 
• Equity Investments: Due to its charity status, Dignitas has limited access to venture capital. 
• Economic Constraints: Teachers' low earnings and economic hardships hinder their ability to pay. 

To overcome these challenges, Dignitas welcomed ideas from various participants in the brainstorming session through these two questions:  

1. What innovative pricing strategies can be employed to accommodate the financial constraints of educators while sustaining the revenue model? What strategies are there to charge other stakeholders? What are useful benchmarks to consider?  
    
2. Are there opportunities for collaboration with other NGOs or private entities to pool resources and share data, insights, knowledge, evidence, and expertise? 

Insights shared by participants   
 
Participants asked clarifying questions on competitor pricing strategy, behavioural changes between paid and free versions, LeadNow certification, and Dignitas’ previous beneficiary charging encounters. Participants shared some recommendations of successful approaches that might have worked in their contexts.
 

1. Getting school financiers to pay: Given the economic constraints teachers face, Dignitas could pitch school financiers or donors who may also be vested in ensuring the capacity development of teachers within schools. Dignitas shared that a nonprofit had sponsored the only instances where a low-fee private school paid for their solution. Pitching to donors responsible for multiple schools can aid the solution’s sales. 
    
2. Managing perceptions by contracting third-party sales partners – To overcome adoption challenges, due to perceptions faced by nonprofits like Dignitas, they could outsource sales to third-party partners with expertise in market entry for paid solutions. This can also help manage capacity gaps in business development and marketing. A participant mentioned that outsourcing business development was commonplace among for-profit organisations trying to sell software solutions.  
    
3. Sharing costs between Donors and the Target Audience – When Labs’ grantee, Gyan Shala, faced a similar pricing strategy challenge, they broke their costs down to fixed and variable costs. Donors covered the fixed costs including the design and management costs of the organisation. The variable costs such as distributed learning materials and supervisory support to schools were charged to the target audience. This approach reduced the financial burden on the schools they served while eliminating budgeting confusion with their funders. 
    
4. Separating tangible products from intangible products: APS (Affordable Private Schools) administrators are often keener to pay for tangible products like lesson plans and learning materials rather than intangible products like class supervision. This has been a common experience for Impact at Scale Labs’ organisations like Sabre Education, and Gyan Shala and partner organisations like FSG. Thus, nonprofits intending to charge APS need to transfer some or all their intangible product costs to the prices of their tangible products. For example, the cost of class supervision can be distributed to lesson material prices that schools are happy to purchase. The program should allow schools to receive both tangible and intangible products.  
    
5. Offering Valued Educational Outcomes: Participants encouraged nonprofits like Dignitas to get government or university endorsements for their teacher training certificates to increase enrolment and commitment. Dignitas can offer familiar accredited learning programs lasting 6-12 months with direct guidance. The software solution can be included as an additional value in the program. Dignitas can then design the program fees to absorb the solution's costs.  
    
6. Tiered charges within the solution – Participants advised Dignitas to consider allowing teachers to access additional modules (content) at a small fee. Basic components of the solutions may be offered for free or at a nominal fee, rather than charging high upfront prices, that immediately cut off teachers who cannot afford the solution. Professional development solutions like Coursera and EdX use this tactic. This can increase the affordability and engagement of the solution.  
    
    
7. Exploring other potential payers - When teachers are heavily constrained from paying for specific resources, providers should examine other potential payers for the solution. Participants gave an example of passing the cost to corporate partners who may be keen on sponsoring teacher training programs. The nonprofit could also co-create specific content with these corporate partners. A case study is Coursera's partnership with Google where Google co-created content and provided financial aid to the target beneficiaries. Sabre also recommended charging schools instead of teachers.  
      
8. Partnering with other providers with sales relationships with schools – Nonprofits could consider collaborating with service providers already familiar with target schools. This would reduce front-facing obligations on the organisation while leveraging the sales infrastructure of the partner organisation.  
    
9. Aligning with the motivation of APS:  Sabre Education recommended that nonprofits remember that APS are businesses and are motivated to grow their schools. Thus, nonprofits should find a way to align the outcomes of their solutions to the schools’ motivations. E.g. An APS may convince more parents to enrol their children in their school after gaining a government-endorsed certificate for a teacher training program organised by Dignitas.  

Takeaways and Conclusion  

One important insight that Dignitas gleaned from the discussion was that identifying who should pay for your product early can help speed up the development of a successful strategy. Another lesson was the importance of designing your product and pricing familiar to your target audience, making them more likely to commit financially and operationally. Nonprofits can combine strategies based on what works best for their specific situation.  

For nonprofits, launching paid products can be a new and unfamiliar experience. However, it can be rewarding to diversify income sources, extend impact, and become more financially sustainable. 

Related Tool in Scale Toolkit

• Payer/Doer Canvas