Nonprofit pricing of services under cost uncertainty

Amresh Hanchate

Journal of Cultural Economics, 1996, vol. 20, issue 2, 133-144

Abstract: For a nonprofit organization that provides individualized services to different customers a natural rule is at-cost pricing — to cover for labor, administrative and other expenses incurred in providing the service to each customer. This not only accomplishes zero profits (losses) but also zero cross-subsidization across customers. But if costs cannot be predicted before the completion of a service, and estimates are used in obtaining such service contracts, then what should be the pricing strategy? We study such a situation facing the Intermuseum Laboratory (Oberlin, OH), a nonprofit organization that restores works of art. Two alternative pricing strategies are proposed, with dual objectives of zero cost overuns and minimum cross-subsidization across customers, and present results from a simulation of this strategy using data from the Laboratory. Copyright Kluwer Academic Publishers 1996

Keywords: firm behavior under uncertainty; nonprofit firms; art restoration (search for similar items in EconPapers)
Date: 1996
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1007/s10824-005-3144-1 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jculte:v:20:y:1996:i:2:p:133-144

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10824/PS2

DOI: 10.1007/s10824-005-3144-1

Access Statistics for this article

Journal of Cultural Economics is currently edited by Federico Etro and Douglas Noonan

More articles in Journal of Cultural Economics from Springer, The Association for Cultural Economics International Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().