What Economic factors have to be considered in determining the charges/ pricing for the Kindergarten services?

Answer 1

expenses, liability, required services, capacity, competition, marketing mix, pro-forma cash flow, target market, short term, mid, long term, expected income

if you plan on operating this business legitimately, you may want to create a business plan

check out the Small Business Administration

www.sba.gov

you may be able to get a low-liability loan from them, if not, they can at least provide you with an outline

fact of the matter is most small businesses fail, theres some preperation involved in a healthy start-up

Answer 2

I would base your prices on what your market segment is willing to pay rather than prevailling economic factors. In doing this, you're drawing on your customers tolerance of economic factors.

In order to assess feasibility I recommend target costing. This involves the following steps.

1. Determine market price for the segment you're trying to attract.

2. Multiply that by the number of customers you expect, giving you the total turnover for the period.

4. Deduct you're desired profit margin, say 20%

5. Now deduct the amount you expect to spend on costs that won't change if the number of customers changes.

6. From the remaining balance, see if you can provide a Kindergarten Service to this many customers. If yes, then you have a viable business.

Now check how much risk you're taking on, a proxy for economic factors.

Easist to explain through an example.

Sale Price £1.00
Variable cost £0.70
For every sale you make, there is £0.30 towards covering your fixed costs.

Fixed costs £300 divide by £0.30 equals 1,000 sales before you break-even. If your original calculations were based on 1,100 sales then you could afford a drop in customers of 10% before making a loss (1,100 / 1,000).

Just play with the numbers until you get a profit that's acceptable to you, with an exposure to risk that you can tolerate.

Good Luck!!

Answer 3

The same factors that impact any business would also impact a kindergarten service. Things like wages, benefits, overhead (utilities, rent/lease, maintenance, supplies, etc.), and profit would all have to be considered in setting prices.

Answer 4

Total up your overheads, add 20% profit and divide by the number of sessions available with the number of carers you have.