A Cost+Gift business model
April 29, 2012
This morning I finished reading Charles Eisenstein’s book Sacred Economics. Wow! Having spent years studying the interplay between energy systems and economic systems and read hundreds of books and articles written by astoundingly sharp people, I have to say I have never had the pleasure of reading anything that compares to the insight and power served up in Charles’ book. If you have not yet read Sacred Economics, I highly recommend it.
Sacred Economics inspired me to reflect on several aspects of my life and my community, but perhaps the most important is how I earn my living. I’m familiar with the idea of right livelihood, having encountered it years ago while wandering through a Buddhist phase in my life. But understanding the concept of right livelihood in an intellectual sense and putting it into practice are two different things, partly because one’s understanding of it evolves as does one’s income-generating opportunities. Sacred Economics forced a dramatic evolution of my understanding of right livelihood and how it should manifest in my life today.
For years I’ve struggled pricing my labor, both in my consulting practice as well as when organizing classes, workshops and mentoring programs. I know that people sign up for these offerings for many reasons and have different expectations as well as different access to resources. I’ve always wanted to honor that diversity, but have struggled to figure out how. In Sacred Economics, Charles offers an idea that’s so intuitive that I feel silly that I didn’t think of it myself. He didn’t articulate a name for the system, so I’ll call it Cost+Gift.
The idea of Cost+Gift is simple: figure out what my costs are to offer a program, and charge all participants those costs up front to make sure I break even. Beyond that, invite each participant, after the program ends and they have a clear understanding of what they’ve received, to offer a gift beyond what they’ve already paid. Some of the participants will find the program more valuable than others, so they have room to offer a larger gift without feeling like they’re drawing attention to themselves. Charging initially only to cover costs also alleviates the potential for lack of resources to become a barrier to participation. Built into the idea of charging Cost+Gift is an incentive for me to offer the best experience or service possible rather than just one that’s good enough, because my total compensation will reflect the value I offer.
Beyond the fact that a Cost+Gift model feels very comfortable to me, it also opens the door to developing deeper relationships with those who participate in programs I offer. By asking only to cover the costs of putting on the program up front, I’m implicitly telling participants “I trust you to compensate me fairly once you see what you’re getting”. I think trust is hugely important – and sorely missed – in communities across the world, and particularly in mine. So I feel compelled to make an investment in my community in the form of offering some trust, if for no other reason than to see what sort of a return it generates. As I reflect on Sacred Economics I’m inspired to wonder what a 21st century economy would look like that was built on trust and gifts rather than laws, contracts and compulsory payments. I figure there’s only one way to find out.