BSEG Advisory

The BSEG Method.

Eight steps. The order is the argument. Cost clarity earns pricing clarity. Pricing clarity earns cross-subsidy. Each step depends on what came before it.

1

Cost clarity

Build the true cost per client by program. Direct delivery costs plus a fair allocation of indirect. Defend the math line by line.

Without this number, every other decision is guessed. Pricing is guessed. Funding asks are guessed. Growth plans are guessed.

Most nonprofits underestimate true cost by 20 to 35 percent. Every decision downstream is wrong by that margin.
2

Client segmentation

Group clients by ability to pay, by program, and by service intensity. Stop treating all clients as one population.

Segmentation is not exclusion. It is the precondition for serving the people who need the subsidy without burning out the model that makes the subsidy possible.

One workforce nonprofit found 22 percent of clients could pay full freight if asked. They had been giving services away by default.
3

Pricing with purpose

Set prices that fund the model, not just cover program cost. Build in surplus targets by segment.

Pricing is the most underused lever in the sector. Most rates were set years ago, against the wrong cost number, and never revisited.

Surplus is not profit. It is the buffer that funds growth, mission expansion, and the next bad quarter.
4

Cross-subsidizing revenue

Use higher-paying segments to underwrite lower-paying ones. Make the math explicit and on the board's table.

Cross-subsidy already exists in almost every nonprofit. The question is whether it is happening on purpose or by accident.

Cross-subsidy without transparency is unstable. Cross-subsidy with transparency is a strategy.
5

Market-rate offerings

Build earned-income products at market price for customers who do not need the subsidy. Use those margins to fund mission.

Market-rate revenue is the only stream that scales without asking permission. It is the structural answer to grant dependence.

A behavioral health nonprofit built a corporate EAP product at $180 per employee per year. It now funds 18 percent of clinical operations.
6

Operations for efficiency

Once revenue is right, fix the operational waste. Not before. Cost cutting on a broken revenue model just delays the collapse.

Efficiency work after pricing work compounds. Efficiency work before pricing work cuts the muscle that would have grown the new revenue.

Cut staff before you fix pricing and you lose the people who would have grown the new revenue.
7

Funders and partners

Reposition the conversation with funders, banks, and lenders. The new financials are the new pitch.

Funders respond to discipline. Show the cost math, the segmentation, and the pricing logic. The conversation changes.

Funders fund discipline. Show the discipline first. The grants follow.
8

Quarterly validation

Re-run the gap math every quarter. The model only stays sustainable if you keep checking.

Costs drift. Client mix shifts. Funder behavior changes. A diagnostic without a checkpoint cycle decays into a slide deck.

Most diagnostics decay in 18 months without quarterly checkpoints. Build the checkpoint into the calendar before you need it.

You don't have a funding problem. Let's prove it.

Sixty days. One number that changes how you think about every program. Start with a diagnostic.

Start a Diagnostic