EVERYONE HAS A PRICE: A VALUE LESSON FOR NONPROFITS, DOTCOMS AND DREAMERS

by Freddy J. Nager, MAOM Associate Faculty

What do charity organizations and most Web 2.0 companies have in common? Neither makes a profit. (Apparently, someone
convinced dotcoms that "free" was a viable business model.) But they all still have prices – just not in the traditional sense of
numbers on a tag.

For instance, I once tried to convince a dotcom executive to create a strong company brand with a distinctive personality,
original look, and a little niche appeal. The exec asked me what's the value of a strong brand, and I noted that it could
command higher prices. The exec's response: "Our site is free, so that's irrelevant."

Not exactly true.

While the company (a YouTube copycat) allowed consumers to view its videos freely, it had to pay much more to video
producers than YouTube did. At the same time, the company was trying to sell advertising to sponsors. Above all, the
company was looking to eventually sell itself to the highest bidder – the ultimate price for any venture.

And that's just scratching the surface.

Here's a list of the kinds prices that organizations and even individuals might have to contend with down the road. Perhaps
you can think of a few more…

1. Price of Sponsorship. Media companies try to sell ads. Nonprofits try to sell sponsorships of special events or ads in
commemorative programs. The stronger the brand, the more the organization can charge for those sponsorships. Some Web
2.0 companies enjoy tens of millions of visitors per month – more than most magazines or TV shows – yet struggle to attract
significant ad dollars. Meanwhile, some highly regarded nonprofits (like certain universities) consistently attract high-paying
donors ("how much to have that campus building named after me?").

2. Price of Talent. Every organization competes for the best employees on the market. What you have to pay them is
influenced by how much they want to work for you. In the world of nonprofits, people will volunteer freely for a cause they
love, with the best causes attracting the best volunteers.

3. Price of Investment: What do you have to give to investors for their money? If you’re a top brand, you give up a much
smaller percentage of your company for each dollar they invest. (For publicly-traded companies, this is obviously represented
by stock price.) If you’re a nonprofit or a candidate for public office, the amount you receive in contributions and what you
have to promise in return are both influenced by the strength of your brand.

4. Price of Publicity: For top brands like Apple, scoring news coverage is effortless. Steve Jobs speaks, the media writes.
Weaker brands need to spend much more on public relations, and may still never get covered by the major news outlets. This
is particularly true in the case of politicians and entertainers: the limelight goes to those the media deems most worthy.

5. Price of Customers: Even if you give your product away for free, it doesn’t mean the customers will come. A strong
brand generates additional traffic effortlessly. Case in point: most video websites are free, but while YouTube’s traffic has
continued to grow, the YouTube clones are mostly flat or declining. Your brand also determines the type of customers you
get — easy or high-maintenance, profitable or penny pinching.

So even if you think you have the best product in the world or are serving the greatest cause of all, you still have to consider
the price of everything. Including yourself. The saying goes, "A cynic knows the price of everything, the value of nothing,"
but entrepreneurs, philanthropists, careerists and social climbers should know all the above. While they might not charge for
their services, they should never sell themselves short.