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Price Neglect

By Amy Cortese  |  Posted 03-01-2002 Print

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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