In today's competitive marketplace, many businesses instinctually look to cost and volume improvements as their primary methods to improving profitability. While these tactics can indeed deliver bottom-line results, many companies are unaware that a more powerful profit lever exists: pricing. By viewing pricing as a strategy and not as an administrative function, pricing improvements can provide businesses with three to four times the impact on profitability versus equivalent improvements in volume and cost. A one per cent increase in price can send operating profits upwards of 12.3 per cent (see chart). Further, strategic pricing can improve margins by two per cent to seven per cent within the first 12 months and provide a return on investment (ROI) of between 200 per cent to 350 per cent ("Activating Your Most Powerful Profit Lever," Deloitte Research 2004).
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