The Sports Office in the University of Exeter sports centre was founded in 1999 with the aim of providing excellent sports services for students and other parties, and to build a high-quality facility base. A lot of money was invested in creating superb facilities and excellent support services. In addition to providing excellent services for students, the center has also benefited the staff and community at large. University of Exeter has invested heavily in the sporting department, as per the institution’s ambition to be ranked among the world’s top universities. As of now, University of Exeter is a leading sporting institution in the United Kingdom. It owns some of the best amenities and services globally. This paper attempts to analyze the pricing policy employed by University of Exeter sports center, and in particular its economics and management strategy.
Every business or profit-making institution has a role or an aim to maximize revenue and profits. To achieve this, various factors that affect total output or production must be well considered. Among these factors is the kind of pricing policy to implement for the various services or goods an institution has to offer to the consumers. Uniform pricing is the easiest way to set prices on products in a firm. However, uniform pricing is the least profitable way to set a price in any given financial or business institution that has the primary aim of maximizing profits. Complete price discrimination is among the most profitable pricing policy commonly used by a number of institutions. Price discrimination is a practice of tailoring a firm’s pricing practice to fit specific situations for the purpose of extracting maximum profit (Acquisti & Varian, 2005). It may involve charging different buyers or consumers different prices for the same product or service. Price discrimination limits consumers’ ability to exercise discretion in the purchased amounts or types of goods and services. Most institutions worldwide strive to develop a pricing policy that will not pose barriers to participation by the less well-off or disadvantaged groups in society.
Exeter centre has established a flexible pricing policy using price discrimination to determine prices to charge users of the sports centre. The center uses third degree price discrimination policy which is a type of price discrimination whereby a firm segments its market into different groups by using identifiable external characteristics, such as age, sex, student and staff, and then charges different prices based on their respective segments (Roy, 2000). The price members pay to participate in any activities in the sports centre depends on the membership type (Non-Member, Standard, Gold or Platinum) and the category the member falls into (staff, student or external). By using third degree price discrimination Exeter sports centre segments its members into various groups and categories, and then charges them different prices depending on the membership type and elasticity of demand. The membership option offers more benefit compared to non-members who use the facilities, and provides flexibility to those who prefer it. The centre offers price discounts on both membership prices and category, depending on the customer’s choice and whether the customer selects the pay-as-you-go option or chooses the prepaid options.
Standard membership gives the user the option of pay-as-you-go activity prices discount and membership rights. For Gold membership, the members choose the option of prepaid unlimited use of 2 gyms and get discounted prices for any other activities. The option entitles the users to free and unlimited access to the gyms, as well as provides them with an opportunity to pay for extra activities when they use them. It is quite economical and convenient for frequent gym users. Platinum membership offers a larger bundle where the member gets the option of pre-paid unlimited use of 2 gyms, fitness classes, squash, badminton, indoor swimming, outdoor tennis, climbing, and table tennis. This is the best package available. Charges for the students and junior category are as follows: Standard membership – £40.00; Gold membership – £225.00; Platinum membership – £280.00. Charges for the University of Exeter staff, Alumni, corporate and lay member’s category are as follows: Standard membership – £42.00; Gold membership – £260.00; Platinum membership – £310.00. Charges for the external member’s category are as follows: Standard membership – £54.00; Gold membership – £300.00; Platinum membership – £360.00
For the non-member’s category, prices are charged are per activity and not per person. The prices for non-members are much higher than those charged to members and depend on how much time they spend on each activity in the sports centre. Non-members pay per each activity, and the prices are determined on whether they used it during peak or off-peak hours, and whether they are Standard, Gold or Platinum members. Below is a chart indicating prices non-members are charged per activity in Standard, Gold and Platinum categories.