Smarter Pricing: How to capture more value in your market

5. Fixed costs per unit sold

The fifth indicator is an internal ratio looking at fixed costs per unit sold. Eugster, Kakkar and Roegner (2000), writing in the McKinsey Quarterly, recommend this as a further way of assessing a market. They suggest that a decreasing fixed cost per unit sold is a sign of prices that are too low. Conversely, an increasing fixed cost per unit sold could warn that prices are too high. In their view lack of quick pricing or volume swings show that prices are at an optimal rate.