XYZ Recreational and Leisure Centre |
||
|
cash budget |
||
|
for the year ending December 20XX |
||
|
quarters |
||
|
1 |
2 |
|
| beginning cash |
5,000.00 |
5,000.00 |
|
cash receipts |
||
| admission revenues |
54,000.00 |
45,000.00 |
| revenue fro Grants |
0.00 |
0.00 |
| total cash available for use |
59,000.00 |
50,000.00 |
|
cash disbursements |
||
| administration and saff expence |
55,000.00 |
55,000.00 |
| maintainance staff expence |
10,800.00 |
9,000.00 |
| Bistro and Smoothie bar expenses |
5,400.00 |
6,000.00 |
| Total cash disbursements |
71,200.00 |
70,000.00 |
| cash supplurs r deficit |
-12,200.00 |
-20,000.00 |
Pricing as an approach for raising income is a complex and intense process that involves many calculations, research work, risk-taking, and the understanding of the market. Pricing strategy is the process of finding a competitive price for the product, and it involves the optimization of profits. Sporting governing bodies, even though it is a nonprofit organization, they need to optimize their revenues. Some of the pricing strategies according to Crompton (2015) include the Marginal cost pricing strategy. It is a model that involves setting prices equal to the extra cost of producing an additional unit of the product. The sporting governing bodies can use the strategy while increasing membership at the clubs. To ensure revenue improvements, they should charge membership fees based on the price incurred in adding one more member into the club. By adopting the policy, the organization can add profits, enter new markets, and also boost sales. Also, it helps with cost optimization. The strategy provides the maximum number of members that can be added to earn more profits or revenues for the governing body. However, the organizations should become aware that the policy can be applied in long-term pricing, ignores customer loss, and ignores market prices.
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The other approach is the cost-based pricing strategy. The price is set based on the cost of goods and services sold. A fixed amount is added to the cost of the product to determine the price. The importance of the strategy stems from the fact that it always assures generation of profits provided the markup value is sufficient and units sold meet expectations. However, it results from prices that diverge away from the market ( Crompton, 2015) . The approach can be improved by adopting a market-based pricing strategy. The strategy can be applied alongside organizing a competition to increase revenues. Sporting governing bodies need to set prices based on the cost of the matches to earn more revenue. Also, the body can use in pricing when hosting major sporting activities based on media exposure cost and sponsorship income.
Another strategy is the differential pricing model, which involves selling the same product to different consumers at a different price. The approach ensures that the organization benefits from a unique customer valuation of the product. For example, the customer who pays in full amounts can be offered discounts. The sporting governing body can apply the strategy when hosting major sporting activities. Differentiation can be used in behavioral pricing and maximization revenues by adjusting prices based on consumer behavior.
Therefore, pricing strategies play a significant role in the determinations of the revenue level. It determines demand and hence the profits. The strategies are pivotal in ensuring cost optimization. Ultimately, the pricing strategies to improve revenues include marginal cost pricing model, cost-based pricing model, differential pricing model, and the behavioral pricing model
References
Crompton, J. L. (2015). Reference price based strategies: a key to raising revenues without alienating users. Managing Sport and Leisure , 20 (5), 275-292 .
