Question

Part 1: Pricing Strategy

Briefly describe pricing for your product or service for non for profit youth program. How does this compare to competitors, assuming competitors are at or near break-even point with their pricing? Analyze pricing alternatives and make recommendations about pricing going forward based on the following:

• How sensitive are your customers to changes in price?
• What revenue do you need to break even and achieve profitability?

• What does the price say about your product in terms of value, quality, prestige, etc.?

Answer 1

The pricing strategy for the service for non for profit youth program is competitive pricing. Since the program has to meet quality standards and attract the right type of talent to deliver the service, competitive pricing is followed. Also, the strategy for competitors has succeeded and they are near break even point, the competitive pricing strategy will ensure profitability also of the program and will be suitable to attract customers as the pricing is comparable to the competitors. The service for not for profit youth program is an important program that determines the future of the youth taking those programs so any compromises on costs cannot be done for the program. Competitive pricing strategy is chosen as it is well above the costs and gives the opportunity to earn profit to manage the costs associated with the program. Other pricing strategies like value based pricing is difficult to match upto the skills associated with the service imparted at not for profit program. It is also not a premium service and the non for profit youth program is not targeted for premium customers.

Customers are sensitive to the changes in price if the increase in price is large. The price increase is not justified for not for profit youth program unless there's significant change in market conditions like those that affect the costs. Revenue required to break even is the investment that are done in the program to hire skilled professionals and equipment. The marketing costs are negligible as the promotion is done by close comparison to customer.

The price says about the product that the product is at par in quality and service as per its competitors. The skilled professionals hired and the prices charged by them justifies the competitive pricing as well as the value delivered by the program. Being a not for profit program increases the prestige of the program as it competes with its similar providers for the youth program at comparable costs and quality.