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Pricing for Profit

Get a clear outline of the essential pricing principles needed to ensure target returns on investment and growth objectives. 

“If there is a flaw in the method used to determine pricing, the marketplace will discover it and use it to their financial advantage.”

Key Foundational Pricing Principles You Will Learn From Pricing For Profit

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The Science of Pricing

There is a definite “science” to the pricing process. A specific framework of principles and objectives to which management must confine itself to maintain growth and to survive.

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Pro Forma Pricing

The first step in developing a pricing formula is creating a pro forma income statement and balance sheet based on the optimum capacity of the organization.

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Determine Markup for all Purchased Goods and Services

The marketplace will allow a high rate of return on the value you add, but NOT on what you buy and resell.

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The Burden

Income statements have a line item labeled SG&A. The G stands for general expenses, often referred to as general factory burden.

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Direct Cost of Each Work Center

To fairly charge a rate for each work center, the direct cost of operating a particular work center must be added to absorb the burden.

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Bringing It All Together

Answering the most important pricing question: “Does that product help accomplish the organization’s strategic goals and objectives?”

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