A company suffering from its pricing policy

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Associé de HBC-KPMG Peat Marwick

Seminar Business life | Friday February 6, 1998

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.

The entire article was written by:

Christophe RAFFALLI

This session was published in issue n°12 of the Journal de l'École de Paris du management, entitled Le village et le monde des affaires .

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