Pricing Recreation Programs

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Pricing Recreation Programs

• Chapter 9

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Conduct summative evaluation
Assess participant needs
Make adjustments continue implementation
Identify org. philosophy mission
Plan design program
Conduct formative evaluations
Engage in pre-program tasks
Implement program
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What does it cost to go out on Saturday night
with your friends?
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Nature of Pricing

• Monetary
• Opportunity
• Psychological
• Effort

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Nature of Pricing

• Monetary
• Direct indirect expenditures
• Registration/admission
• Transportation
• Clothing equipment
• Refreshments/sustenance
• Qualification

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Nature of Pricing

• Opportunity
• Time that could have been spent doing something
  else
• Pay the price of lost opportunity
• Measured in several ways
• Time money
• Grade points not studying
• Missed family time
• Lost experiences

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Nature of Pricing

• Psychological
• Psychological stress
• Fear
• Boredom
• Anxiety
• Embarrassment
• Self-esteem
• E.g.. Survivor

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Nature of Pricing

• Effort
• Physical mental energy expended
• Marathon runners

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Class Question

• Marathon runner Pete.
• What are the costs to his participation?
• Monetary
• Psychological
• Opportunity
• Effort

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Pricing Process

1. Understand trends
2. Understand budget process
3. Determine the overall costs
4. Determine purpose of pricing
5. Determine differential pricing
6. Determine alternative funding
7. Examine the psychological dimensions of pricing
8. Establish the initial price
9. Understand price revisions

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Step 1 Understanding Trends

• What is happening in p r?
• Decreased tax support for public agencies
• Do more with less
• Fight for
• E.g., Illinois tax caps

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Step 1 Understanding Trends

• What is happening in p r?
• Decreased charitable support for NPOs
• Do more with less
• Fight for
• E.g., September 11 impact

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Step 1 Understanding Trends

• What is happening in p r?
• Contracting services
• Public NPO contracts with business
• Special events
• Fundraising
• Business contracts with public NPO
• Fitness Centers
• Road races
• Tourism Bureaus

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Step 1 Understanding Trends

• What is happening in p r?
• Expanded definition of costs
• Not just money anymore
• Impact on people environment
• E.g., Snowmobiling in national forests

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Step 1 Understanding Trends

• What is happening in p r?
• Increased competition
• Public, NPOs, Business
• Seek to keep prices low quality high
• Compete for time money
• Who is Nikes competition?
• Who is BPRDs competition?

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Step 1 Understanding Trends

• What is happening in p r?
• Partnerships
• Work with others to reduce costs
• Avoid duplication of services
• UPD/CPD
• BPRD/NPRD

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Step 2 Understanding Budgets

• Process
• Annual or bi-annual
• Approval process
• Board or Stock Holders
• Advisory Council
• Annual increase or decrease
• What are agency priorities?

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Types of Budgets

• Operating budget
• Daily expenses
• Capital budget
• Large items/purchases
• Program budget
• For 1 program only
• Line item budget
• Breaks down every expense

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Step 3 Overall Costs

• What costs might you have to bring a national
  softball tournament to Bloomington-Normal?

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Step 3 Overall Costs

• Cost a monetary measurement of the amount of
  resources needed to create, implement, and
  evaluate programs
• Types of costs
• Indirect Costs
• Direct costs
• Fixed costs
• Changing fixed costs
• Variable costs

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Step 3 Overall Costs

• Indirect costs
• Those costs incurred regardless of whether or not
  the program is offered
• Examples
• Computers
• Office staff
• Marketing
• Heat, electricity
• Administrative staff

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Step 3 Overall Costs

• Direct costs
• Those costs that may be traced directly to a
  specific program
• Incurred only when the program is offered
• Examples
• Instructor
• T-shirts
• Supplies

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Step 3 Overall Costs

• Direct costs
• Fixed costs
• Regardless of the number of participants, the
  cost remains the same
• Examples
• Rental of a facility
• Sound system
• Instructor

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Step 3 Overall Costs

• Direct costs
• Changing Fixed costs
• Relative range that things stay fixed
• Examples
• Gym space for basketball league
• Instructor for an arts class
• Once the program reaches a certain point, the
  range is increased
• 1-25 participants 1 instructor
• 25-50 participants 2 instructors
• 25 teams per league per gym

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Step 3 Overall Costs

• Direct costs
• Variable costs
• Those costs that are directly related to the
  program and vary proportionately with changes in
  the number of participants
• Examples
• Supplies
• Shirts
• Trophies

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Formula

• Indirect Direct Fixed Changing Fixed
  Variable Total Cost of Program

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Step 4 Determine Proportion of Costs

• Types of services
• Purposes of setting a price
• Cost Recovery Rates

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Step 4 Determine Proportion of Costs

• Based on type of service provided
• Public (Basic)
• Merit
• Private

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Public Services

• Free services
• If the community benefitsthe community pays
• Broad reach of services
• Hard to collect fees
• Examples
• Public parks, trails, tennis courts, at-risk
  youth

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Merit Services

• Services that indirectly benefit the community
• Most beneficial to those who receive it
• Split between taxes user fees (subsidy)
• Examples
• Aquatics programs and services
• Day camps
• Senior Centers

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Private Services

• Benefit only those individuals who use the
  program or service
• Participation is at the discretion of the user
• Participant pays
• Examples
• Golf
• Adult sports leagues
• Most commercial providers

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Types of Services

• Public Public Agencies
• (Basic)
• Merit Public Agencies/NPOs
• Private Public Agencies/ NPOs/ Comm
  ercial

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Step 4 Determine Proportion of Costs

• Types of services
• Purposes of setting a price
• Cost Recovery Rates

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Purpose of Pricing

• Recover costs
• Create new resources
• Recover more than you spend
• Put money back (reinvestment) into programs
• Dividends for shareholders

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Purpose of Pricing

• Establish value
• Price sets the value in your mind
• Not always good to offer free programs
• Influence behavior
• Season tickets
• Twilight golf
• Late fees

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Purpose of Pricing

• Promote efficiency
• Shift demand for services
• Travel industry

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Step 4 Determine Proportion of Costs

• Types of services
• Purposes of setting a price
• Cost Recovery Rates

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Cost Recovery Rates

• Break-even
• Revenues expenditures
• Subsidize
• Revenues lt expenditures
• Profit
• Revenues gt expenditures