Relational pricing—An idea whose time has come

Bertha House is a slick, ultra-modern multipurpose community centre tucked away behind the façade of an ordinary-looking building on the main road through Mowbray, Cape Town. It has a coffee shop, cinema, library, co-working spaces, meeting halls, a media lab and more. We were there for a tour as part of the 2024 Open Book Festival. Having arrived with no expectations, we were impressed by the hospitality and thought that went into the design of the space. What left the biggest impression, however, was their pricing model.

Based on a three-tier sliding scale, the model is an example of relational pricing—allocating a price to a good or service based on the needs and realities of the parties involved. In the Bertha House model, people who use the space pay based on what they can afford. Those with more resources pay the higher standard rate, those with the least pay the low rate and those in between pay the middle rate. That way, no one who’d like to use the venue is excluded based on their inability to pay a set price. The pricing model also applies to Bertha Retreat, which we also got to visit later that day. Bertha Retreat—a picturesque lodging space for group gatherings on Boschendal Wine Estate—and Bertha House together form Bertha Spaces, a program that provides venues for changemakers to gather, work and collaborate.

Bertha Space’s three-tier sliding scale pricing model (click on image to read more)

The model stuck with us because we’ve been thinking a lot about relational pricing in our book production and publishing project. If, as the popular account goes, economics is about the efficient allocation of supposedly scarce resources, then need—instead of who can afford the advertised price—should be the primary determinant of where and to whom said resources go. A good, albeit jarring example of how dominant pricing models are not only inefficient but also wasteful is the situation in South Africa, where supermarket shelves are almost always full and a third of food produced in the country goes to waste yet, somehow, only 36.5% of households rarely worry about having enough food. The rest, an astonishing 63.5%, experience some degree of food insecurity because they can’t afford the sticker price.

Relational pricing as a response to these inefficiencies would mean that the price people pay, even for the same items of food, would depend on what they can afford.

A typical response to ideas like this is that they’re impractical. Supermarkets are set up based on standard pricing because anything else would be unmanageable. How would they even begin to know who can afford what?

In the Bertha Spaces model, it is self-reported and based on trust. That’s part of the answer. The culture among the kinds of people Bertha serves—community organisers, activists, social entrepreneurs, and others—is oriented toward being and doing good. Trust is high, valued and nurtured. But this isn’t unique to this community and can be fostered elsewhere, if lacking.

Another element is that by allowing people access to a resource they need at a price they can afford, Bertha Spaces is building their community’s productive capacity. With this resource, the recipient can do work that might one day allow them access to more resources, possibly moving them up into a higher tier where they can cross-subsidise others.

A final element worth highlighting is having a structure that helps both parties to the exchange communicate their needs and realities. That’s the relation in relational pricing. It goes both ways and is not entirely a free-for-all. Bertha Spaces does this through its three-tier sliding scale that offers clear guidance on who is in what tier, but there are other ways to do it. In our work, for instance, we’re thinking of ways to make it more deliberative. We’re also aware that it won’t be easy in a country so marked by great need and stark fortunes. The tour of Bertha Spaces made it clear that even though they enjoy the privilege of receiving funding from the Bertha Foundation, founded by pharmaceutics billionaire Tony Tabatznik, they still need to look for that cross-subsidisation sweet spot where the blended average price across all three tiers of their model allows them to cover their unfunded costs.

Now imagine if these unfunded costs, too, were priced relationally as part of a larger ecosystem where relational pricing and similar mechanisms of solidarity were hardcoded into the everyday workings of all entities in our economy. It’s not impossible. Moving away from the inefficient outcomes of the so-called law of supply and demand as a pricing mechanism and opting instead for non-exclusionary, non-exploitative mechanisms is doable. Relational pricing enacts solidarity economics—a framework for seeing and thinking about our economy as a means by which we, living beings, meet our needs and aspirations based on acknowledging and seeking to enhance our mutual interdependence in pursuit of our individual and collective wellbeing. It is a way of seeing ourselves not as coldly rational, self-interested bots that actualise their potential in isolation from each other and the planet we call home, as traditional economics would have us believe. Rather, solidarity economics allows us to conceive of ourselves and act as tightly integrated, dynamic and complex parts of a larger, intergenerational whole whose constitutive elements are all just as important.

It’s great that programs like Bertha Spaces embrace this more holistic, relational way of being. More people should, too. We certainly are. So keep an eye out for more soon on what relational pricing looks like for us.