Suppose the Province of Alberta decided to preserve some beautiful caves in the southwestern part of the province. To defray the cost of preservation, provincial managers decided to open the caves to guided tours. To prepare the caves for visitors, vapour locks were built so that the moisture content of the caves would remain stable. The province spent $10 million on the facilities. Now the managers need to decide on a price for the tours.
INFORMATION ANALYSIS
REQUIRED
The following questions will help you analyze the information for this problem. Do not turn in your answers to these questions unless your professor asks you to do so.
A. Describe how pricing policies in not-for-profit organizations are different from pricing policies in for-profit organizations.
B. Use the Internet or other sources to identify current prices for other similar attractions.
C. What additional information would you gather to evaluate the price?
D. Do you believe that the volume of tours is likely to be sensitive to the price charged for tours? Why or why not?
WRITTEN ASSIGNMENT
REQUIRED
The managers of the park department need your price recommendation. Turn in your answer to the following.
E. Use the information you learned from the preceding analyses to write a memo to the Parks Department, recommending a price for the tour. Provide appropriate information for department managers to understand your methodology and evaluate the risks associated with your price recommendation.