Target Margins
About half the number of firms in the questionnaire reported having target margins but only about 25% said products and services met their margins, due to various reasons:
• Price discounting
• Pricing high as a cautionary measure because of not knowing costs and margins
• Not knowing competitor or market prices
• Not having competitive advantage, but rather “me too” products and services.
These reasons point to the uncertainty about setting prices and target margins and underscore the book’s premise that SMMs typically operate without knowledge about their costs and margins, customers, markets, and competition. Fortunately, since costing and pricing are not exact sciences, there are practicable measures SMMs can use to cope with ...
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