I have been thinking a bit lately about using benchmarking in conjunction with Give Freely Receive Freely offerings.  This could potentially address a number of challenges people have with GFRF.

Challenges

Perception of value

One of the challenges with GFRF in this status driven, money oriented, marketing focused, accumulation crazy, money centric society we live in is that a lot of the time people take price as an indication of quality or value of something that is offered.  All too often price is an entirely inadequate indicator, but nonetheless it is there deeply rooted in a lot of peoples psyches.

With this deeply entrenched thinking, when people encounter something which they can have for ‘free’ (GFRF), unfortunately I think many of them assume a lower quality or value is being offered.  This can lead them to not take full advantage of what is being offered – instead going for something that has a price that matches their expectations of the value they wish to receive.

I think with time and exposure people can overcome this bias as they realize that just because they can get what is offered for free, this does not equate to low quality or value.  In fact GFRF provides the ultimate conceptual counterbalance to this perception – there is no upper limit to what you can choose to pay (give in return) for something received on a GFRF basis either.  In a way I think over time this could lead to perception of higher value for GFRF offerings than offerings with set prices because the offerer is also giving you something else – Freedom to assign value as you see fit.  What price do you put on freedom in any of its forms?  I think it is very valuable.

But still, this shift requires a change from what is the predominant mode of current thinking and having a benchmark price can give a receiver a starting point in determining value.  They still then have the freedom to choose to assign a different value to it outside of the benchmark indication if they wish.

Input costs

This leads to another challenge with GFRF that benchmarking can address.  A customer (receiver) generally does not have a full appreciation of the cost of the inputs involved in providing what they receive (rent, labour, materials, R&D, taxes, administration, communications etc etc), so they don’t know if what they pay for it will even cover the cost of provision or whether it may actually cover the costs many times over.

Benchmarking can address this by giving an indication of an exchange level that covers the givers costs and provides them with what they need to be able to comfortably continue providing what they offer.  Receivers can still choose to give less or more than this according to their personal circumstances and their desire to provide additional support, see the venture grow and expand, express gratitude etc.

Freedom discomfort

In my experience a lot of people like the idea of GFRF, but when confronted with actually doing it find it very uncomfortable – perhaps due to some of the reasons discussed above.  They don’t want to rip off the person giving to them but don’t know how to assign a value to what they have received without some kind of external direction.  In the end I usually help these people out by giving them some kind of idea of what I used to charge when I had set prices, what other people charge for similar services etc.

A benchmark would probably help these people to come to a price point they are comfortable with a lot more quickly and easily, but this then leads into some of the downsides of having a benchmark for GFRF offerings.

Less engagement required

By giving someone a benchmark price they no longer have to think as much about what has gone into what they have received, they no longer have to think as much about the welfare of the person or people they have received from, basically if they want to they can just take things on face value and go back to thinking more about themselves and less about others.

I think overall this leads to less understanding, care, compassion and to use a cliched term – ‘connection’ between parties to the exchange.  It is easier for people to be wrapped up in their own world, selfish and self centred because they are not required to put as much thought into their interactions with others.

Of course just because there is a benchmark doesn’t mean people will think/act in this way, just as with set prices people don’t always think/act in this way.  But the thought required to decide for yourself what or how much you will give to someone else in return for what they provide you acts as a great prompt for people to think in a caring, compassionate way for the people around them.  I think this benefit is weakened by having a benchmark in place.

Intrinsic Value Identification

In my mind this is probably the biggest downside to having a benchmark.  People don’t have the same level of stimulus to identify and appreciate the intrinsic value of something. It becomes much easier for them to rely on an externally imposed indicator of value and assign their own internal value and appreciation accordingly.

I think many of us do not come close to fully appreciating so many of the most valuable things in our lives.  The people we love and have close relationships with.  Nature and the environment (a beautiful sunrise, clean air, fresh water, trees, etc).  Freedom to act, think, change and grow.

These things are FREE yet have infinite value.  Also while being FREE, they are not without cost.  Relations require time, people require communication and support, our environment requires that we take care not to destroy it, our freedoms have been defended repeatedly with the lives of soldiers fighting those who would control us.

We can’t really assign a price to these things.  Money may be involved in supporting and protecting  them, but it does not represent their value.  Somehow putting a price in dollar terms on these sorts of things cheapens them and causes us to miss their true value.  One of the big problems in our world today is people focusing so much on money and what they can get for it that they do not appreciate or make full use of what they already have.

Similarly having a benchmark is putting a dollar value on what is offered – and I think can take the mind away from understanding and appreciating the true value received, regardless of money being exchanged to support the provision of the offering.

Less Freedom

Basically putting a monetary value on what is offered makes the whole exchange less free.  People are inclined to base their value perception and exchange behaviour around the indicated value even if they don’t have to because it is a benchmark rather than a set price.  The fact that a number has been put on it causes them to begin to think in a certain way about it relative to the benchmark.

In essence the canvas for the exchange is no longer blank it has a mark on it that participates are likely to evaluate things in relationship to.  They no longer have full freedom to determine and define their own parameters.

This can lead to them feeling inadequate or ‘cheap’ if they pay less than the benchmark, and conversely it may restrict them from giving as much as they would like because they don’t want to overpay too much above what something has been deemed to be worth.

Much as with the other downsides discussed, having a benchmark doesn’t necessarily mean people will behave in this way.  They can still choose to do what they like, even with a benchmark they have great freedom in the exchange under GFRF. The situation just doesn’t encourage the same level of freedom. Essentially to obtain it they have to first ‘paint over’ the established benchmark on the ‘blank canvas’ so that it does not influence their own thinking and perceptions.  It is one more step to full freedom in their own mind which most people won’t take, most people will leave the benchmark there and evaluate in relationship to it.

Does the idea have merit?

In the end I think the idea of benchmarking alongside GFRF offerings is not ideal, but does have merit.  It makes the idea of choosing your own price for exchange more accessible to many people so that they will feel more comfortable doing it.  It could act as an entry point to GFRF for people, and once they get comfortable with GFRF with a benchmark they might be able to move on to a more ideal type of GFRF exchange without benchmarks – much like taking the training wheels off a bike.

I know that many people struggle with the practicality of GFRF exchange, even if they like the concept, and having an easier version for them could be a good way to start them experimenting in exchanging in this way.

Someone who attended one of my qigong workshops recently told me about her experience with a cafe in Auckland that used to operate ‘gift-economy’ (very similar to GFRF).  She said much as she liked the idea she couldn’t bring herself to go in and eat there because she didn’t know how to come up with a price.  Now that cafe no longer operates on ‘gift-economy’ it has set prices, probably because lots of other people were also uncomfortable exchanging in that way without reference point.  Benchmarking could have been some intermediate ground that might have worked and encouraged their ‘gift-economy’ principle to grow.

A friend of mine who is a lawyer operates in a way similar to this (yes a lawyer with a heart and conscience… they do exist).  His firm tells their clients what their full chargeout price for work is, but because they work with a lot of startups recognizes that they may not be able to pay the full price and allows them to come up with a price they can afford.  In this way they allow the client to use their services at a price they can afford, without the client perceiving those services as lower quality due to the lower cost.  The expectation is set that when the client can afford to pay more they will come up to the full pricing.  This helps the law firm earn the money that it needs across different clients and avoids clients jumping ship to another more expensive firm due to perceiving the lower cost services they have received as lower value.

It is a practical solution that also allows compassion, and one that I respect greatly.

Scale of GFRF approaches

Practicality is important, great ideas are only valuable if you can actually get them to work.  Along these lines I think there is a scale of ways that GFRF can be implemented according what is most ideal vs what is most practical/workable.  That scale probably looks something like this:

(Underground GFRF is another idea I’m toying with, I wrote about it in this post here)

I think that moving at least some way up the scale is preferable to staying stuck at conventional pricing.

Implementing a Benchmark

There are several ways you could go about setting benchmarks if you chose to.

1. The pie in the sky method.  This is where you set a ridiculously high price on what you are offering, thus increasing the receiver’s expectation of what they should pay for it in the hopes that they will feel good about paying a reasonable price and that they have actually got far more value than this.  This has been used extensively in high pressure sales environments, particularly infomercials and internet infoproducts.  I guess they use these strategies because they have found that they work, but I feel like they are intellectually dishonest (why exactly are they selling you something of ‘over $5000 value‘ for the ‘low today only price of $27‘ again?).
2. The competitive market approach.  This would involve comparing the prices that others in the market offer similar goods or services for and pricing according to the relative quality of what you offer.
3. The cost plus approach.  This would involve adding up the total cost of providing what you do and then adding a margin so that you can make some kind of profit.
4. The end result approach.  This would be where you decide how much you would like to earn and how many goods/how much service you are comfortably able to offer and divide the end sum by this to come up with unit pricing.

The Decision…

So back to the question of whether to benchmark or not to benchmark.

I can see it as possibly being useful.  I know that in the past I have tended to set my prices too low, I think I have tried to price for the lowest common denominator to make what I offer as affordable as possible for everyone.  But this has meant that I have not always been able to offer the level of service I would like too due to having insufficient resources.  It has also sometimes led to a lower perception of value – which can be very frustrating, knowing that often you are actually providing something of better quality than someone else charging several times your price and having people perceive the value based on the price rather than what is actually received.

Benchmarking could address some of these issues by giving people a pricing indicator in line with the quality offered while allowing those who can’t afford that to still pay what they can afford to receive the service.  I prefer the purity of straight GFRF though.  I think there are additional benefits to this that you don’t get with a benchmark.

I don’t know at this point if I will use benchmarking with my GFRF, but it is another useful  compromise approach that I could use if needed as I continue to experiment with GFRF.