1% Price Change 11% Profit Increase
A consultant study across 1,200 major businesses found that a 1-2% increase in price, assuming demand remained constant, on average would have increased the company’s profit by 11%. Clearly, this could be a quick boost to your company’s profitability.
For a quick example of the impact of a price change, consider a business turning over $500,000 per year. Let us further assume that it makes a 5% Profit on that, which gives it a Profit of $25,000. If it increased its Price by 1%, and assuming demand remained constant, that would lead to an extra $5,000 in income, therefore Profit. This extra $5,000 over the original $25,000 is an 11% improvement.
For more background information to this Skills Module go to:
SM1.0 How 1% Price Change Gave 11% Profit Increase
The Skills Module is divided into a the following articles:
SM1.1 Rapid Profit Increase from Price Change
SM1.2 Longer Term Pricing Systems