#2 - The Hunger Games phenomenon inspired many archaeologists to embark upon a legitimate search for

the site of the arena. One of your high school

buddies was part of the team that actually located this incredible site. Since she knows that youre studying
Parks, Recreation, and Tourism, she recently asked for some help from you. She wants to run llama trips to
the site, but has no idea how much to charge.
First, help her contemplate the idea of break-even pricing. To do this, you need to
identify at least six costs, at least one of which must be indirect and at least one must be direct. After you
have identified the costs, estimate the cost for each. Remember, the cost may be variable (and yes, I realize
you may not be an expert on llama trips to watch the Hunger Games). Then, help her find the break-even
price.

Your buddys not in this for altruistic reasons, however, and wants to make some bucks. Based upon your rich
knowledge of pricing, provide her with two different (additional) approaches to determining an appropriate
price for her trips. Clearly identify which approaches you are using, explain them in detail, and provide a
good explanation of why each strategy would be appropriate after all, your friend wasnt a PRT major. You
do not actually have to calculate a new price for this approaches.

a legitimate search for

ws that youre studying

nts to run llama trips to

t be direct. After you

able (and yes, I realize
r find the break-even

cks. Based upon your rich

rmining an appropriate
detail, and provide a
wasnt a PRT major. You

Llama Trips to the Hunger Games Arena Assuming each trek will last appro
Types of costs
Estimates per person, meaning pe
Variable: Camping equipment - direct
$
60.00
Llama food - indirect
$
10.00
Party food - direct
$
20.00
Map and compass - indirect
$
5.00
Llama rentals - direct
$ 100.00
Contingency for llama/human injur $
50.00
Fixed cost: Gas price
$
40.00
Guide wage
$ 700.00
fixed cost
$ 740.00
Total price per person - variable co $ 245.00
Price = (VC+FC)/N; let's say 6 people sign up
6
157.50
Break-even = fixed cost/(price-variable cost)
$ (8.46)
I do not understand why the break even pricing is negative, or what that means
Let's say to break even you want to make $0.00; therefore fixed cost = variable
This looks like: $700 = $255*N; N
2.86 meaning around 3 people need to

This doesn't add up to anything, so I am going to calculate the unit price using
$ 164.17
Therefore break-even $ (9.15) which is again, sadly, negative.
So if I change N to N =
4 break-even $ 592.00 This is a very large, b

Alternative 1Let's say revenues are to be $300 per trip, therefore units
1.83
Revenues/price=units sold
This alternative involves determining how many people should be in a trip to m
Alternative 2Redetermine the price using the equation P=(FC+VC*N)/Nwhere N =
This alternative would make the individual pri $ 430.00
Therefore the break-even would be:
$
4.00
In this case revenues = price*units sold
$ 1,720.00

h trek will last approx. half a week

person, meaning per llama

I do not understand why this number is less than the variable cost, since that applies to each individu

or what that means, so I am going about this in a different way.

fixed cost = variable costs*units(humans going)
nd 3 people need to sign up to make up for the cost for guides

he unit price using P=(VC+FC)/N.

his is a very large, but positive number. I still do not know what It means, but this is my final answer to paragrap

or 2 people are needed per trip to make around $300 per trip.

uld be in a trip to make the most profit.

4

pplies to each individual, but this is the only equation I know.

nal answer to paragraph 2

TICKET PRICING CONUSLTANTS INC

Arena Maximum Capacity

Arena Rental Per Hour
Arental Rental Minimum Charge
Hours
# of Staff per
per # of customers
Staff Hourly Rate
Staff Benefits (%)
Cost of (1) Program
Contigency Rate (%)
Profit Percentage (%)
Consulting Fees

$
$

3,000
250.00
1,000.00
6
1
20
$20.00
30%
$0.50
40%
150%
2,000.00

Total Cost of Arena Rental

# of Staff Required
Total Staff Pay (including benefits)
Estimated Attendance
Firecode violation warning (too many people in arena)
Total Costs of Programs
Additional Contingency Costs

TOTAL COSTS

$ 29,000.00

BREAK EVEN PRICE

9.67

PRICE INCLUDING PROFIT

24.17

Overpriced Tickets Warning

2013 TPC Inc

1,500.00
150
$23,400.00
3000
3001
$1,500.00
$
600.00

PRICE IS FINE

#3 - You work for a company that consults with leisure organizations on how to pric
have been approached by a company that wants to host an X-games challenge eve
know how much they should charge for the event. To get things started, you ask th
different costs associated with the event. They give you the following list:

Arena rental currently $250 per hour, with a minimum charge of $1,000. However
negotiable.

The arena holds a maximum of 3,000 people, but they are concerned that they wil
tickets.
Staff for crowd control. Staff are paid by the hour

Staff also receive benefits such as health insurance. Benefits are calculated as a pe
pay (%).

They are not sure how many staff they need, but they know it should be based on a
per # of attendees
Every person who buys a ticket also receives a complimentary program.

They also have to pay you, your consulting fees. You charge a lump sum based on t
event. Your fees are negotiable
They are worried about inflation and want to build in a contingency cost (%).
They would also like to make a profit (%).

They think if tickets are priced at more than $50, no one will come and ask you to m
template will warn them if the suggested price (including profit) is more than $50.

Please complete the template to the left to help the company decide what they sho
tickets.
Cells highlighted in yellow are input cells. You can put any reasonable number in
Cells highlighted in light green are formula cells. You need to create the formula to
Cells highlighted in black should not be changed.
Note, I have set up this template to guide you, but there may be other ways to get
another way works better for you, please feel free to use it.

e organizations on how to price their events. You

ost an X-games challenge event and wants to
get things started, you ask them what are the
ou the following list:

um charge of $1,000. However, that may be

ey are concerned that they will not sell that many

Benefits are calculated as a percentage of total

y know it should be based on a ratio of # of staff

imentary program.

charge a lump sum based on the scope of the

a contingency cost (%).

one will come and ask you to make sure the

ding profit) is more than $50.

ompany decide what they should charge for

put any reasonable number in that cell.

need to create the formula to calculate that cell.

ere may be other ways to get at your answer. If

use it.