Trends: Twists on Online Data - ' Price Neglect '
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Price Neglect
How some execs set prices now
40 % match online prices to those offline
30% set all prices by matching rivals
28% have no Internet pricing strategy
22% set all prices only to recover costs and tack on profit
18% do customer research to determine value to buyer
Source: Survey of professional pricing society members
Profit Levers
Price changes have the biggest, fastest impact on profits compared with other factors
+ 1% price= profits up 8.6%
- 1% variable cost = profits up 5.9%
+ 1% volume = profits up 2.8%
- 1% fixed cost = profits up 1.7%
Source: McKinsey & Co.
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