Document Type

Guide/Toolkit

Publication Date

2004

Abstract

Social programs need to balance volume (coverage) and revenue (sustainability). The law of demand says that we cannot get both coverage and sustainability at the same time—as prices go up, demand will come down. Client loss with increasing prices is inevitable, except in those cases where starting prices are so low or demand is so high that demand is insensitive to price changes. Willingness to pay surveys allow program managers to simulate price-related changes in demand without actually changing prices, giving them a way to make pricing decisions based on empirical information. In making pricing decisions, managers of social programs face an equity dilemma—the problem of balancing the need for program sustainability with the social goal of making services available to low-income clients. Raising prices too high will deny services to poor clients. However, maintaining needlessly low prices will perpetuate reliance on external donors. Until recently, managers had to make pricing decisions without a reliable methodology for predicting the effect of price changes on program revenues or use. This user’s manual describes a simple survey technique to estimate client willingness to pay for goods and services, thus allowing managers to make rational pricing decisions.

DOI

10.31899/rh17.1005

Language

English

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