65B - SERVICE FINANCIAL REPORT - Laserfiche WebLink

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6. ALTERNATIVE FUNDING SOURCES In general, there has been a decrease in the amount of tax support available to public Parks, Recreation, and Senior Services agencies across the nation. The Divisions are forward thinking in their planning. As such, the need to look at alternative funding sources as a way to financially support services has become commonplace. Alternative funding sources are vast and can include: • Gifts • Grants • Donations • Scholarships • Sponsorships • Collaborations • Volunteer contributions 7. EXAMINING THE PSYCHOLOGICAL DIMENSIONS OF PRICING In addition to the social and environmental issues surrounding pricing, the human elements of pricing must be considered. Regardless of how logical a price may seem, customer reactions and responses are their own and can be vastly different than what one might expect. The psychological dimensions of pricing include: • Protection of self-esteem (pricing in such a way as to not offend certain users) • Price -quality relationship (value received for every dollar spent) • Establishing a reference point (worth of service in comparison to others) • Objective price (price has a basis in fact, is real, and impartial) • Subjective price (price is not biased or prejudiced) • Consistency of image (perception of the brand and identification with product or service) • Odd pricing (perception of arbitrary or incongruent pricing) 8. ESTABLISHING INITIAL PRICE Establishing an actual price for a program can be based upon a variety of strategies including: • Arbitrary pricing: basing fees on a general provision such as raising all fees $.25 to meet budget goals which ignores market conditions and cost recovery goals. Arbitrary pricing is not encouraged, as it is impossible to justify. • Market pricing: a fee based on demand for a service or facility or what the target market is willing to pay for a service. The private and commercial sectors commonly use this strategy. One consideration for establishing a market rate fee is determined by identifying all providers of an identical service (examples: private sector providers, municipalities, etc.) and setting the highest fee. Another consideration is setting the fee at the highest level the market will bear. • Competitive pricing: a fee based on what similar service providers or close proximity competitors are charging for services. One consideration for establishing a competitive fee is determined by identifying all providers of an identical service (examples: private sector providers, municipalities, etc.), and setting the mid -point or lowest fee. • Cost recovery pricing: a fee based on cost recovery goals within market pricing ranges. 9. UNDERSTANDING PRICE REVISIONS Once a price is established, there may be the need to periodically review it and examine the need for revision. In some cases, "revised" may be viewed as "increased;" therefore, a systematic approach to pricing revision is important. Factors to consider in pricing revision include: • Customer tolerance: the degree to which small increases in price will not encounter client resistance. • Adjustment period: the period of time where the value of the service is assessed by the customer in relation to the price increase. The value of the service from the customer's perspective must meet or 50 Q 65B-54