Asma's daycare


Cost Plus

It is important for when Asma is making the decisions that she thinks of the cost of setting up. When I had an interview with Funcare limited, I found out that it took them £32,000 to start a daycare. This means that Asma must take from this and plan accordingly - She must take the cost and add profit , thus creating her price. This will guarantee her a profit. So, I would suggest her to price around £32 a day. I also found out that the average household income is around 15% higher than that of the rest of North Yorkshire and the rest of England. This means that Asma can risk to charge more than the average for daycare.

Psychological pricing

Cost plus pricing may guarantee a profit, but for some, it may just be too high. Psychological pricing can fix that. This is where Asma keeps the price relatively the same but minuses a small amount off. For example, I would suggest to charge £31.99 or £29.99. This is scientifically proven to be more likely to be more appealing to people as it seems cheaper. Howver, it may make people think that it is low quality if it far cheaper than competitors.

Differential pricing

This would be where Asma charges less or more depending the age of the children. This can mean that Asma can charge more for younger children as they need more one to one care, as I found out from the interview with Funcare limited. Thus I would recommend charging £34.99 for younger children (1-2) and £31.99 for older children.

Competitor pricing

Finally, for Asma, I would suggest using Competitor pricing to get a better, more appealing in both quality and price. This is where Asma would compare prices with other successful businesses and make hers closer to their asking price. However Asma must keep a unique selling point else people may go to her competitors, even if they cost more, purely because they think it'll be better. Whereas if Asma dose have a unique selling point, she may have more demand and more popularity and ultimately, profit.

Funcare charges £42 a day. They charge more than others due to their unique selling point of being better. If Asma were to charge that little, many may perceive it as being lower quality, so perhaps Asma could charge prices such as £39.99 for younger children and £37.99 for older ones. This will make people think that its high quality and (due to psychological pricing) perceive it as being lower priced. On the other hand, Funcare uses promotional pricing. the older sibling gets 10% off. Asma may wish to use this method, too, as it has worked for Funcare.

Another factor that Asma must consider is the cost of labour. In my interview with Funcare, I found that their biggest cost was funding their labour. Funcare overstaffs to keep up quality, meaning that if Asma is to do the same, she must take into consideration the cost of extra employees. I would suggest Asma to have less employees but charge £39.99.