A company suffering from its pricing policy

• Gérard HAUGUEL
  Associé de HBC-KPMG Peat Marwick
  

Summary

Gérard Haugel demonstrates that the consequences of a pricing policy are highly significant, but are generally not understood by companies. A policy of price controls is designed to improve the productivity of a company. It achieves this by massive investment and/or by significant social sacrifices. At the same time it allows prices to drift with serious economic consequences. The loss of a profit margin, which is a hazard in such a policy, is almost inevitable when a pricing policy fails to control the process of defining net price. Salesmen who try to get the best deal for their customers by discounting prices may contribute to financial disasters by such methods. If a company knows how to adjust and set out its pricing policy, not only can it increase its profit margin, but it can also significantly improve the relationships it has with its clients.

Summary translated from French by Rachel MARLIN.

• The entire article was written by Christophe RAFFALLI.

To obtain this article, you can :

• download it for free in French (PDF help) or contact ecopar@paris.ensmp.fr (Reference VA060298).

The entire article appears in French in the Journal de l'École de Paris du management N° 12.