Are your prices high enough? asks Stephen Oliver after attending a workshop (possibly mine?) where the 'higher price vs lost profit' argument is made.
He goes on to quote the great "Do Mercedes Salespeople Stay Up Nights Worrying About Low Kia Prices?" question and we know what the answer is.
"Your costs aren't going to fall just because you choose to charge less for the same service. The result of dropping your prices by 10% is to reduce your profitability by around 33%. To stay in the same place and earn the same gross profit, you are going to have to do a whopping 50% more business to cover your discount costs!" (see the table in 'Bright Marketing' or Beating the credit Crunch' if you need to make sense of this.)
- Are your prices high enough?
- "Do Mercedes Salespeople Stay Up Nights Worrying About Low Kia Prices?"