Guest Post: Privilege Based Pricing

A few months ago, I was connected with Peter Rubin who was experimenting with a new pricing model the likes of which I’d thought of before but of which I’d never heard: privilege-based pricing. As soon as I heard the name of it, I asked if he’d be willing to write a blog post. This isn’t a model I’ve implemented yet, and neither has he, but it’s the kind of thing I imagine I will be moving towards in the coming years for, at least, certain portions of my business.

Peter and I share an understanding that this world is full of institutionalized oppression, meaning that certain people (and it’s predictable who) tend to have it easier than others, get better access to resources etc. Myself being a white, CIS gendered, male in North America? I get a lot.

And I did nothing to earn those privileges.

Women, people of colour, indigenous people are marginalized and oppressed constantly. It’s something I’ve put much thought into over the years, even creating a blog you may not know about called Healing from Whiteness. I’ve also collected an impressive gathering of memes and articles on topics from Institutionalized Oppression and then a second one on that topic, Feminism and Gender, #BlackLivesMatter and White Privilege.

So, it’s been on my mind.

But Peter has taken this all to another level by considering how this could all be woven into our pricing structures.

This post is provocative. It may feel unsettling. I invite you to read it in full and sit with it for a while.

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by Peter Rubin

What is Privilege-Based Pricing?

Privilege-Based Pricing is an innovative pricing structure designed for social justice.

Unlike sliding scale systems which typically have no guidelines or simple income-based guidelines for how much to pay, Privilege-Based Pricing takes clients through a rigorous self-reflection and conversation process which determines a discount on services, ranging from zero to 50%.

The discount is calculated to correct for the imbalances of an unjust culture. It’s an experiment in taking all the rules of our society and turning them around 180 degrees.

This is not a scholarship or a charity for people who are less privileged. It’s also not a way to punish people who are more privileged. It’s a way to make the invisible privileges of our lives visible, bring balance to an unfair world, and spark learning and transformation for all.

What do you mean by privilege?

In one of my favorite books, Waking Up White by Debby Irving, she talks about “headwinds” and “tailwinds” as the forces that make our lives easier or harder each day based on whether we’re in a dominant or minority group.

Factors outside of our control, such as race, gender, access to education, family resources growing up, where we were born, experiences of trauma or lack thereof, etc., profoundly shape our life trajectories.

Where did this idea come from?

As a Business Midwife – someone who helps my clients give birth to their dream businesses – I’ve come to realize that certain clients are poised to make a lot of money from the outset, and for others it will likely be a much longer journey. This doesn’t have to do with their skill or how good a person they are — it had to do with their privilege.

For instance, a white male client with a graduate education, who has already had a successful corporate career, has a lot of money in his bank account, and is connected to wealthy and powerful people, will likely have an easy time getting a return on their investment.

In contrast, a black female client who grew up poor, is supporting 6 family members, has experienced significant trauma in her life, and wants to build a community-focused business will likely have a more challenging time paying for her coaching with me.

My question is, why are these two clients paying me the same amount of money?

In the old “equality vs. equity debate” the idea of privilege-based pricing is to look at a client’s resources and ability to make money based on their life story and privileges they’ve received in order to determine a price that creates equity by stretching everyone equally.

All clients receive the same high-quality service, and I hold all clients to the same Visionary Code – principles for being powerful creators in their lives and businesses. But the place each client is starting from is acknowledged.

How would you respond to people who might say, “Isn’t this reverse discrimination?”

No. It’s about equal opportunity and restoring balance to an unjust culture.

Women make 79 cents for every dollar men make (source). The median wealth of a black family is $6,446 while a white family is $91,405 (source). These are long-term trends and statistical truths, and they won’t resolve themselves without a change in policy.

Why wait for government policies, when we as entrepreneurs have the power to create change by changing how we price our own services?

For legal reasons, the Privilege-Based Pricing Questionnaire doesn’t ask directly about race, gender, sexual orientation, etc., but rather explores how our identities mixed with cultural biases influence our chances of business success, asking questions like, “Do you see other people who look like you leading in your field?” and “Do you have family members who are role models for business success?” and “What’s the most money you’ve made in your life?” These are the invisible headwinds that make it easier for us privileged people to succeed.

Why does this idea matter to you so much?

I’m currently immersed in a 2-year training with Lee Mun Wah to be a diversity facilitator. I’ve been deeply exploring my own whiteness, having conversations with friends about race and privilege, and have been curious about how I will bring these learnings to my business.

This idea of Privilege-Based Pricing came to me one day, and I smiled. I have a trickster side to me, and this feels like the perfect “trick” to play on all of us (myself included) to challenge the assumptions we have about how business should be done.

I’ve been doing some informal research on the concept with the intention of implementing it in my business in January of 2017. It feels like a big risk, and yet a unique and profound way to practice the social justice values I’m preaching.

I’m happy to discount my services to some clients in order to spark a healing conversation about privilege and, hopefully, have a more diverse and socially-aware group of clients as a result.

How exactly does the process work?

There are three steps to the process. They include:

Step 1 – Education

Because this is such an unusual pricing system, it’s important to give context. The model will be explained to potential clients so they understand what they’re getting into, and the intentions behind it.

Step 2 – The Questionnaire

I send an online survey to potential clients that asks about specific questions about:

  • Their personal and family story, and the advantages and disadvantages they’ve had from before their birth to the present.
  • Their existing resources – including financial resources, social capital, and more.
  • Their potential for future income – based on their vision for their business, who they plan to serve and how they plan to price their services.

The exact questions in this questionnaire are still being worked out.

Step 3 – Conversation + Decision

Then we review their questionnaire together and decide together how much of a discount to give them. There will be six tiers of discount, from no discount up to a 50% discount, with case studies that exemplify each tier. This conversation is held as sacred, and we will take time to process any emotions that come up along the way.

Do you think people will take advantage of the system?

I guess people could lie about their responses, but those aren’t the sorts of people I work with. I handpick clients who care about social justice and have a lot of integrity, and I trust them to answer honestly and pick the tier that best represents them.

Where do you expect to receive the most pushback?

Let’s be honest – there’s nothing comfortable about this pricing system!

In the testing I’ve done, just along lines of race, people of color have been pissed (“I don’t need your handouts!”) and white people have been pissed (“How dare you reverse-discriminate!”). People of color have been delighted (“What a cool way to bring privilege to the light!”) and white people have been delighted (“I’d be happy to pay more to support this”).

So I realize that what I’m filtering for isn’t privilege at all. I’m filtering for willingness to be vulnerable.

Determining your Privilege-Based Price is an incredibly vulnerable process and brings up the very things we are taught to be most private about – race, class, level of education, etc. I intend to be very tender with my clients as I talk through the questionnaire with them, expecting difficult emotions (shame, grief, fear, etc.) to come up.

Those courageous and open-minded souls who want to be part of a social justice experiment will be drawn to this new pricing system. Those who aren’t open to it will be turned off by it – and that’s just fine!

I’ve found that clients who are most vulnerable with me get the most value out of working with me. They’re able to release shame and reclaim their power, making them stronger business leaders. So filtering for a willingness to be vulnerable can only be good for my business.

What kinds of places could you imagine people using this?

This pricing system is somewhat complex – each client is required to fill out a questionnaire and have an in-depth conversation with a service provider who has the capacity to hold space for such a conversation. So I don’t imagine us using Privilege-Based Pricing at vending machines! But I do think it is promising for transformational education and services.

How can people learn more about Privilege-Based Pricing and the work you do?

You can visit my website at www.yourbusinessmidwife.com and sign up for my mailing list. I’ll be keeping my subscribers in the loop about PbP and announcing when I officially launch the new pricing system in January of 2017.

downloadAbout Peter Rubin

Peter Rubin helps visionaries give birth to their businesses. He gives his clients the support they need to get clear on their visions, craft a strategy, and deliver it to the world. Peter has developed this radical approach to business, having given birth to a series of transformational service-based businesses himself, each time pushing his edges and learning from his failures. Before becoming a full-time coach in 2011, he was a consultant at IDEO and Daylight, two of the world’s leading innovation firms. He has taught at the Stanford d.school, OneTaste, General Assembly, and beyond. He lives in the Bay Area with his life partner, Morgan West, a midwife (for real babies!) who continually inspires him with her badass midwifery skills and devotion to her clients at all hours of day and night. Learn more at www.yourbusinessmidwife.com.

About Tad

  • Jennifer Gyuricska

    I love this idea and think it’s great for a business coach. I could also see it working for clients you meet IRL for other businesses. Kudos Peter!

  • Tracey Tief

    BRILLIANT! I may not get the nerve to fully try this, but I am going to get more explicit in my sliding scale pay what feels right speeches. I explained “pay what feels right” to a woman today who asked me what I suggested as payment, and when I told her one way to look at it is to pay me what she earns, she totally turned her head away, shut down and changed the subject. I am thinking about how tonight I gave a workshop attended by 4 people who collectively paid $130 “what feels right” ($32.50 each), but who in their feedback surveys value my workshop at $220 ($55 each). So they decided to pay less than they think the workshop is worth. Huh? Frankly, I think that people need to feel they’ve gotten a deal, even when it is over someone they respect. I just bought some of your books because you had a deal going. I think having a self examination questionnaire as a tool will help people get past that bargaining place. BTW I followed your suggestion to separate out and fully charge for costs upfront, and am really happy with that. Super happy that I keep the materials and costs contributions for no shows, too. Thanks!

  • Dorothy Nesbit

    Deep gratitude for this post, Tad, for your thought leadership and your willingness to connect with and share work from other thought leaders – this time, Peter Rubin. I find it inspiring to think about… just at the very beginning of connecting with Peter’s idea.

  • Anne O’Farrell

    I’ve been using a similar model for over a year now. I appreciate that the true possibility of this pricing structure is to open up ones awareness and vulnerability! I have many of the same experiences as the article mentioned and more not mentioned, on many different aspects of the spectrum. What I really noticed though, is the conversation can distract from the service being offered, especially if it’s coaching / consulting. If the practitioner is aware of this, they can help their potential client navigate. What occurs is the needs of the client may be circumnavigated to focus on money and all that brings up, which may be a distraction to what the client is actually seeking. So much comes up in these conversations of pricing, beyond what the client has come to the practitioner to seek guidance for. Awareness is paramount here, to be certain the practitioner is truly seeing and being with the needs of the client. So much more about my experience with this in the past year. Grateful others are interested in exploring this as well. It’s quite a journey of mastery for the practitioner in my experience, balancing the pricing conversation with the reason the client came to one in the first place. I am trying on a new model after having experimented with this… excited for new possibilities!

  • Kate O’Brien

    I have been thinking about charging the same price as my clients charge for a long time now, with the understanding that if they raise their rates, my rate would raise also. It is the only way that I have been able to think of to create an equal exchange of value on time as a service provider and for me to be able to work with artists and freelancer/contractors who are less privileged than I am. I work mostly on business strategy and projects with other service providers and many of them make way more than I do for all of the reasons that go with privilege, including confidence, appearance and social connections. I absolutely love the first conversation about pricing being a screening tool of sorts and am very curious to see how this evolves.

  • I think the process helps to make selection more transparent. That’s one thing I was concerned about.

  • Peter Rubin

    Thanks, Jennifer! I agree, it has applications far beyond business coaching.

  • Peter Rubin

    Thank you, Tracey. You bring up some of the painful shadow of sliding scale pricing. Don’t get me wrong – I appreciate the sliding scale model and am glad it’s in our menu of pricing options, but too often I’ve seen people abuse it. Or, if not intentionally abusing it, letting their scarcity thinking get the better of them, and sell everyone short. It’s a recipe for resentment. I hope that Privilege-Based Pricing has the benefits of sliding scale with more of a backbone. So it’s not just about “how poor or rich you feel today” but a more objective and comprehensive wakeup call about the privileges we each have.

  • Peter Rubin

    Dorothy, I’m touched! Thank you. And thank you Tad for giving me the opportunity to share my perspective with your tribe.

  • Peter Rubin

    Hi Anne, thank you for sharing your experience. You raise a good point about having this conversation while honoring and holding as center the client’s needs and desires for reaching out. I’d love to hear more about the model you’re using the what you’re learning that I may not have thought about. If you’re willing to share, would you email to set up a chat?

  • Peter Rubin

    Kate, what an elegant solution to the same issues I’ve been exploring. Inspiring.

    Some questions arise for me:
    – What if they’re new and unclear of what their rates are?
    – What if they’re under-charging and being martyrs – do you jump into the martrydom pit with them?

    These could be worked out, of course :)