Companies can increase profit either by cost reduction or margin improvements. Margin improvement or improvement in the gross profit can be achieved either by increasing unit selling prices or by increasing sales volume (this includes the possibility of reducing unit selling prices in order to be more competitive and increase sales volume).
Supply, demand and cost conditions affect selling prices. All companies need to ensure that their pricing policy gives the best opportunity for maximizing sales and profits.
With the modern methods of communication, customer contact is easier and quicker. This may enable you to simplify your channels of distribution and improve your competitiveness. Your pricing policy would obviously come under review.
Keep pace with inflation.
The inflation rate is the percentage rate per period that prices are increasing and should provide a guideline to the level of price increases generally.
Keep an eye on competitors’ prices movements.
Smaller companies – which are growing in number day by day – with lower overheads, are able to react very quickly and obtain orders through price flexibility. You must know what your competitors are doing to adapt to the circumstances.
Maintain information regarding changing price levels in the market place.
A business will only survive if it continues to receive orders from clients. It will only receive orders from clients as long as it is competitive. It is therefore necessary to ensure that policy decisions take account of the severity of price competition in the market place.
Calculate the effect on profits of reduction in price.
Salesmen like to reduce prices in order to encourage sales, but the effect of doing so has always to be considered most carefully. Always calculate by how much sales must increase to achieve the same result as before.
Present your prices in the most suitable manner for your customers.
Every customer wants to know how much the product is going to cost him.
margin прибыль; предел колебания цены
improvement зд.: повышение
to ensure гарантировать
competitive конкурирующий конкурентоспособный
to come under review рассматриваться
to keep pace with не отставать от
to keep an eye on следить за