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Session Title:“Pricing Your Educational Product/Service for Long Term

Profitability”For delivery during EI ays! Feb" #$%#&! #$&'

(elcome and Session )vervie* +suitable for mar,eting-.+ minutes-

This session will help participants understand a basic methodology for pricing their company’s

 products/ services and the impact of product pricing on a company’s long-term strategy and profitability. The session will be oriented toward new/emerging entrepreneurs in the early stages

of their company’s development and will introduce a set of basic pricing principles that are

fundamental to a company’s business strategy. Participants will receive a spreadsheet templatethat they can use in their own company to analyze alternative pricing structures and their impact

on the longer term profitability of their company.

)b0ectives 1+ minutes-

By the end of this session, learners will be able to

• !nderstand a set of basic principles that affect the pricing of an educational product/service

including unit costing, direct costs and allocable costs, gross margin percentage, customer

ac"uisition costs, etc.

• #iscuss and reflect on the how these basic principles operate within their specific company in

real, practical terms.

• $dentify how the pricing strategies of various companies can differ based on the nature of

their business strategies, the economics of their products and their e%pectations of future

revenue growth.

• !tilize a provided spreadsheet to analyze the impact of various pricing strategies on their

company’s long term strategy and profitability.

Presentation and 2rou3 E4ercises +5$ minutes-

• !nit Pricing &ethodology

o $t is critical for your company to have a clear methodology for determining the price of

the products/services it offers to the mar'etplace.

o (hile there are multiple approaches to pricing, the methodology is ultimately based on

the unit costs incurred in delivering the product/service on a per customer basis.

• #irect )osts

o #irect costs are e%penses that are generated and incurred by delivering a product/service

to an additional customer.

o The incremental costs of providing a product/service to an incremental customer.

o )osts of goods sold *)+.

o There are two broad categories of direct costs to consider

o Direct program costs – %penses generated by the direct provision of a

 product/service to a customer.

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o Direct allocable costs – %penses that are shared by multiple customers and/or sites,

 but are costs that increase in direct response to an increase in the number of

customers.

• roup %ercise

o $dentify the following items for your business and describe your thin'ing to your

neighborso (hat are the primary direct program costs of your business0

o (hat are the primary direct allocable costs of your business0

o (hat costs are you unsure how to categorize0

• )ustomer 1c"uisition )osts

o )ustomer ac"uisition costs are e%penses that are generated and incurred by selling a

 product/service to an additional customer.

o The incremental sales/mar'eting costs of a product/service to an incremental

customer.

o There are two broad categories of direct costs to consider

o Direct sales costs – %penses generated by the direct sale of a product/service to a

customer.

o Allocable sales costs – %penses that are shared across multiple customers and/or

sites, but are mar'eting costs that a portion of the company’s overall mar'eting program.

• roup %ercise

o $dentify the following items for your business and describe your thin'ing to your

neighbors

o (hat are the primary direct sales costs of your business0

o (hat are the primary allocable sales costs of your business0

o (hat costs are you unsure how to categorize0

• &argin Percentageo +nce you have determined the 2per unit costs3 of providing a product/service to a

customer, it is critical for your company to determine a margin percentage it will apply tothe sale price of the product service.

o The margin percentage can vary substantially based on

o )ompany strategy.

o )orporate overhead costs.

o %pected sales volume.

o $nvestor return e%pectations.

• roup %ercise

o

$dentify the following items for your business and describe your thin'ing to yourneighbors

o (hat is the primary rationale for a high margin business0 1 low margin business0

o (hat is an appropriate margin percentage for your company’s primary

 product/service0

o 4ow do you determine an appropriate margin percentage for your company0

o 4ow can mar'et research and competitor analysis affect this process0

• 5orecasting &ethodology

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• )ase tudies

o 5le% 1cademies

o lobaloria

Individual 6ctivity to be com3leted off line%*it7 feedbac, from trainer +&$minutes-

ach participant will receive a forecasting spreadsheet template which they can use to model theunit pricing of their company’s products/services. The instructor will review the spreadsheet

template during the session and then will be available to coach and provide feedbac' to

 participants who complete a pricing analysis for their company.

(ra3 u3% +&$ minutes-

The 'ey ta'eaway for the session is for participants to develop an understanding of a basic

methodology for pricing their company’s products/ services and the impact of product pricing ona company’s long-term strategy and profitability. The final section of the session will focus on

feedbac' from the participants regarding the effectiveness of the session in accomplishing this

goal and their interest in future sessions on related topics.

)omplete participant valuation 5orm.