Which pricing model is based on actual costs, often used by internal service providers or nonprofits?

The pricing model that is based on actual costs and is often utilized by internal service providers or nonprofits is the cost pricing model. This approach focuses specifically on calculating the total cost incurred for delivering a service, including all direct and indirect expenses. By using this model, organizations can ensure that they cover their costs and maintain a sustainable operation without necessarily aiming to generate profit.

Internal service providers or nonprofits typically operate with the objective of providing services rather than maximizing profit margins. Therefore, the cost pricing model aligns well with their mission, as it allows them to set prices that ensure service sustainability while making services accessible to their stakeholders or community.

This model also provides transparency because stakeholders can see how prices are formed, which can help build trust and encourage cooperation within the organization or between the service provider and its clients.