32 Profitable pricing

‘Pricing is the third business skill. (The first being the ability to create value and produce goods or services. The second being the ability to sell products or services.)’

Ernst-Jan Bouter, pricing professional and author

In a nutshell

Price has a direct impact on profit. £1 additional revenue results in £1 additional profit. Similarly, a £1 discount results in £1 less profit.

Given the competitive environment facing the majority of businesses, pricing decisions are too important to leave to operational departments using traditional cost-based approaches. Pricing has strategic importance.

Competition and customer pressure often result in the temptation to offer discounts; however, this can have a detrimental effect ...

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