Workshop Three – Price & Finance

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The beautifully historical 14th century Lumley Castle in Durham provided the most ambient venue for the third workshop in the FBMplus 2015/2016 competition, even if you are to believe the tales of the haunted woods!

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The castle has been the seat of the Earl of Scarborough for more than 700 years, but was named after Sir Ralph Lumley in 1360. As the story goes the castle is haunted by his wife Lily who was thrown into a well by two priests for rejecting Catholicism. The tales say her ghost rises from the well and haunts the grounds of the castle!

Since 1976 Lumley Castle has been a four-star hotel, with 74 bedrooms and grand conference and banqueting facilities for weddings and celebrations. It even has it’s own dungeon! The perfect venue considering this year’s competition theme of ‘Hospitality’.

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Teams from Bishop Auckland College, Park View School and Framwellgate School Durham came together in this workshop to consider price and finance within their business concept.

Jenny Barrett, Managing Director of TICE started by presenting a handy recap of the theory covered to date including identifying the business target audience and competition. Followed by recommending teams distinguish between price and finance for ease of gathering the relevant information and consider initially, “What affects your price?” Answers correctly suggested were logistics, location, competitors, staff and manufacturing costs and also perhaps government policies, all influential factors to take into account when setting a price for a product or service. An explanation of the three ways to determine method based pricing was given: Cost-Plus pricing (most popular), market based pricing and discounting for larger quantities.

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The second half of the theory learning covered finance, the fundamental costs a business must determine and plan for in documents including a Start-Up Budget and Cash Flow Forecasts. Jenny said. “We want teams to get realistic quotes for expenditure such as rent, rates, utilities, stock as if they are setting up a real business”. Lots of informative templates were handed out to help teams through their pricing research phase and assist in devising a pricing strategy for their product or service ideas.

Following the theory learning, teams were privy to a very entertaining history of Lumley Castle by Mike, the castle Chamberlain who dressed in full medieval costume too! It gave a fascinating insight into how the castle has survived through the centuries and how it came to be a hotel, utilising the castle rooms to their best advantage. For example the old castle canteen is now the Black Knight restaurant. Mikes accompanying tour of the hotel served to embellish the facts and stories even more so and a quick peek down the well to see where Lily Lumley met her demise couldn’t be resisted!

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Back in the conference room Nathan Cook, Duty Manager at Lumley Castle talked about the hotel’s pricing structure as it is now and how the different room rates are reflective of the hotel occupancy levels and by taking into account external influences such as events, competitors pricing and seasonal fluctuations. Nathan explained, “Price needs to coincide with the approximate pricing demands of our target market, with a clear awareness of our market place competitors.”

Nathan continued by saying, “Lumley Castle welcomes and encourages the development of students within the commercial trade and is pleased to give an insight into the pricing structure and marketing within the hospitality trade.”

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Team Laurus are currently leading the competition after the first two challenge submissions as they have demonstrated an ability to apply relevant research and attention to detail in proposing their idea. However it is all to play for as to conclude this third session the next set of team challenges was proposed. Teams must produce a product specification sheet, a pricing strategy and attempt a projected Cash Flow Forecast. Competition judges want to see a range of information gathering techniques carried out to determine the appropriate pricing structure, and points are awarded accordingly within the competition criteria.

Now there is just one more workshop left on the FBMplus competition and workshop four looks at Marketing and Promotion.