Fee Setting

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Assignment: Fee Setting

Exercise 11.1

You are the executive director. Following the checklist in Figure 11.1, perform all the computations necessary to set a fee. What will your fee be? What is your break-even point? What is your go/no-go decision point?

Fixed Costs

1. Conference room rental $175.00 $ 175.00
2. Audiovisual equipment Rental 75.00
3. 4 presenters @ $500 2,000.00
4. Indirect costs @ 25% of $3,675.00 $ 906.00
5. Profit margin @ 5% of $4,594.00 $ 227.00
Total Fixed Costs $3,383.00

Variable Costs

6. 45 workbooks @ $15 $15.00
7. 45 lunches @ $12 12.00
8. 45 coffees @ $3.50 3.50
Total Variable Costs $30.50

BEP

I would put my breakeven and go/no go point at 30 attendees. This allows enough room and equipment available since there is a maximum of 40 people that can fit in the room. This also allows for the agency to profit off of anything over the 30 attendees and enables to agency to at least break even on the seminar.

XP= A+BX
30P= 3,383 + 30.50(40)
30P= 3,383 + 915
30P=4145.50
P= 143

The fee is set at $143 per attendee.

Exercise 11.2

As the executive director of Advocates for Children, you have had a change of heart. You decide not to attempt to maximize revenues in this second seminar. You decide to exclude a profit margin in the fee computation, but you will include indirect costs. Additionally, the local United Way in the community hosting the seminar has guaranteed 45 participants. If fewer than 45 participants register for the seminar, the United Way will make up the difference. In exchange for this guarantee, the United Way has asked you to set the seminar fee as low as possible. Following the checklist in Figure 11.1, perform all the computations necessary to set a fee. What will your fee be?

Fixed Costs

1. Conference room rental $175.00 $ 175.00
2....
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