Optimal pricing for a target profit: case study on a veterinary diagnostic laboratory

When a social sector is with an intention of meeting a target level of profits instead of simply aiming for zero profit or maximizing the profit, a proper pricing policy needs to be set up. At present time, a Veterinary Diagnostic Laboratory performs a large number of tests on various animal tissues and has never had the appropriate prices to change for these expensive tests. This study presents a model for optimal pricing for firms such as the laboratory with a target profit motive instead of the normally expected maximum profit objective. We make suggestions for the laboratory on the basis of the results obtained and a sensitivity analysis. This model can also help other similar social organizations to define their pricing strategy.