Price Management vs Profitability

The answer to how often any of these ten situations occur in your sales department is a good way to diagnose the health of your business.

Friday, June 10, 2016

1) "It's very difficult to sell at these prices, this is the biggest complaint in relation to sales." Vendors argue that the company's prices are a major obstacle to making progress in the market.

2) "Competitors have very aggressive pricing strategies." Rivals survive by moving prices which affects the company and puts it under permanent pressure.

3) "Discounts have been maxed out". A large percentage of sales end up being made at the maximum possible discount or via promotions.

4) "Volume is growing, but results are deteriorating". Margin has been sacrificed in order to boost volume, and now the results are insufficient.

5) "Large customers negotiate in such a way that final margins are very small." The most important customers constantly put on pressure, and by doing so manage to get extremely high discounts.

6) "Only discounts work to stimulate sales." The sales force is convinced that most sales are defined by price. All other factors are secondary.

7) "We provide additional services with a lot of added value, but there is no way to cash in on them." A way can no be found to charge for all the extra services provided to customers.

8) "We do not know the real profitability of each sale." There aren't any updated and easily accessible reports that reflect the overall profitability obtained in each transaction.

9) "The rate of increase in costs is impossible to sustain with these prices." There is no possibility of transferring all of the cost increases to the price.

10) "Complaints from the sales channel regarding profitability are permanent". The sales channel (distributors, agents, wholesalers, retailers) complain about reduced margins.

If these problems are the exception in the sales department, profitability will probably be good. Start worrying if these situations occur frequently.

See the complete text of Diagnosis of Profitabilty on Fijaciondeprecios.com (in spanish).



More on this topic

Prices: How to Avoid Losing Money?

July 2020

Segmenting customers by prices they are willing to pay, showing the value of the product or service to charge higher prices and being careful when applying discounts are some of the recommendations from experts to avoid losing money.

Ariel Banos, founder of Fijaciondeprecios.com explains some of the myths that exist among business leaders when building a pricing strategy, and what could be the alternatives to not lose money.

Prices: The Art of Discount Management

January 2019

Properly establishing the criteria for the application of discounts or special conditions helps to wisely manage price reductions without compromising the company's profitability.

Price management specialist and Fijciondeprecios.com founder, Ariel Baños, explains how through the "strainer strategy" discounts to customers can be managed intelligently.

When Should you Lower Prices?

May 2013

Three situations which, if they are happening in your company, indicate that you should lower prices.

By Ariel Baños,, President and founder of FIJACIONDEPRECIOS.COM

Is it too obvious? The quick and intuitive response would be that it is appropriate to reduce prices when sales are falling or the level of turnover is very low.

Fixed Prices Bring More Profits

February 2013

How to boost profitability by making better decisions when putting a price on what we sell.

By Ariel Baños an Economist at fijaciondeprecios.com.

Some customers have rejected our quotes, and in sales outlets questions can be heard over certain prices. Our vendors warn about the aggressive competition.

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