Costing and pricing of services at Labib Medical Center : consulting project -

Abstract

This consulting project about costing and pricing of services at Labib Medical Center (LMC) aims at helping the management of LMC in exploring the challenges and opportunities that enable it to manage the cost and pricing of the services offered and maximize revenues. Looking at the services where pricing is tough to negotiate, improving costs is crucial, where building cost models is a starting point. Units at LMC are divided into profit and cost centers. Cost per one unit of measurement per profit center is calculated, where total cost is equal to the sum of direct, overhead, and share of indirect and service departments’ costs. On the other hand, looking at one of the services, where LMC could improve its profitability by improving its pricing strategy, this project presents to the management different pricing approaches of the rental fees of the clinics. Increasing flat rate versus price modeling driven by willingness to pay increased total revenues generated from 34percent to 228percent.