Price Setting and the Role of Management Accounting for Service Provided by Not-For-Profit Non-Governmental Organizations

Compared to business organizations, not-for-profit non-governmental organizations consider far more factors when setting the price of their service than just expected supply and demand for. The paper focuses on both the factors which influence the price setting process and which are specific for not-for-profit sector and whether management accounting knowledge can make the process of price setting more rationale and evidence-based. Based on observation of many of NGOs, the factors can be derived and generalized – they are: insufficient knowledge of real cost structure of organizations’ activities, legislative restrictions and/or other limitations the organizations voluntarily impose mainly due to ethical considerations about availability of their service to prospective clients.