Is pricing a piece of cake or are you risking a soggy bottom line? | The Drum

Generating profit is a pretty straightforward recipe – the key ingredients of profit, as we know, are price, volume and cost. Sadly, while the recipe is quite simple, putting the right amount of each ingredient into your mixing bowl is usually where the problems creep in and can leave you with a soggy bottom line.

When times are leaner, or ‘uncertain’ as seems to be the description that is very much in vogue at the moment, business leaders all too often spend a lot more of their energy on addressing the costs in their businesses. At times business owners may also be tempted to rush towards volume in the belief that doing more will make them more.

It turns out though, that the best way to turn up the heat in order to increase your profit is to understand much better the role that pricing plays.

Price cutting or setting your product or service prices too low means you have to gain massively more accounts to maintain an acceptable level of profit – way out of proportion to what you would ever imagine.

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Is pricing a piece of cake or are you risking a soggy bottom line? | The Drum.