What’s the IHDI and How Did it Influence Our Global Pricing?
The Challenge of Global Pricing
The challenge of determining global pricing is not uncommon for companies who provide products or services to their clients and customers worldwide. Common considerations include company costs, customer price sensitivity, market competition and potential challenges. For some organizations, ALJ included, the costs to provide some of our services globally may be no different than they are to provide them locally. However, there may be a significant difference in the ability of consumers, in our case, leaders across the globe, to afford such services.
Determining the right pricing strategy is unique to each organization and the markets and individuals it serves. Some opt for a one-size fits all approach where everyone pays the same price for the same service no matter their locale. Others look at gross domestic product (GDP) to determine pricing based on grouping countries in sectors based on similarly-sized GDP.
The latter approach may appear to lean more toward identifying a fair price across geographies, however, a significant factor is not considered. Strictly looking at a country’s GDP does not factor in the well-being of its inhabitants. If the wealthiest people in a country become wealthier, the country’s economic performance improves but that increase in GDP does not necessarily correspond to increased well-being for the rest of the humans who live there whose daily lives may remain unchanged.
Where’s the Human Experience Factor?
The United Nations attempts to factor in the human experience through its Human Development Index (HDI), which ranks countries based on their average achievement in key dimensions of human development (including education, longevity and standard of living). According to the UN, “The HDI was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic
growth alone.”
HDI, though, does not consider the influences of inequality. So, that leads us to the UN’s Inequality-adjusted Human Development Index (IHDI), which “combines a country’s average achievements in health, education and income with how those achievements are distributed among [a] country’s population by “discounting” each dimension’s average value according to its level of inequality.” In simpler terms, the IHDI adjusts the HDI rankings to factor in inequality related to health, education, and income. “Under perfect equality the IHDI is equal to the HDI, but falls below the HDI when inequality rises. The difference between the IHDI and HDI is the human development cost of inequality, also termed – the overall loss to human development due to inequality.”
The IHDI helps to shed some light on our understanding of inequalities across populations and how that contributes to the overall human development cost. While intended to aid in making policies to help reduce inequality, it can also be applied to inform pricing.
ALJ’s Approach to Pricing
As an organization that focuses on developing leaders, ALJ was committed to creating a pricing structure that allowed us to honor our truths:
- Our collective goal is to develop the awareness and capability of leaders worldwide in highly complex, uncertain and rapidly changing environments to improve their business outcomes.
- Pricing for participants in our global programs should be fair and equitable.
- We have a responsibility to give back.
For many of our guide-to-customer services, like local and online awareness workshops, we have a global guide community available to serve with local-based pricing. If your country is not represented here (as we continue to grow), reach out to us to find some help or consider joining our guide community if you believe you have the experience and education to lead others.
However, our global programs (most commonly our practice programs), invite participants from around the globe to participate in a shared learning and development ecosystem. For these shared programs, we incorporate leveled pricing based on the IHDI. That means that the larger the gap between the HDI and IHDI[1], the greater the inequality (and related to our pricing structure, the lower the price for our services).
While we recognize that no pricing structure is perfect, we believe this to be as equitable as possible and consider the portion of costs that ALJ absorbs to be an investment in the leaders of today and tomorrow, addressing our third truth above.
Learn More
Sign up for our Applied Agility in Leadership Program to help you develop habits to be a great leader. The registration page will display IHDI-influenced tiered pricing and you may view the current IHDI categories of countries here.
About the Author
Tracey Wilson has over 20 years of experience in operational leadership in organizations ranging from small startups and service providers to large financial institutions. Tracey lives in the Joshua Tree, California area with her partner, Dave, and a small menagerie of four-legged and feathered critters. Her background is in sociology and education, which she draws from in her work at Agile Leadership Journey and in the local youth development program she co-founded and co-chairs, the Yucca Valley Antlers. When she's away from the office, she can be found camping, hiking, tending her garden, reading a book, or spending time with family and friends.
Footnotes:
- Many of our programs (most commonly our training workshops) are priced based on the Guide’s (instructor’s) country of origin, thus already taking into account a fair local price and local currency. In those cases, the prices listed reflect the prices to be paid without special discount compensation.
