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Are your margins what you think they are? Are price wars an imminent threat to your organizations revenues and profit?
People want things. People need things. The difference between prices and costs is not just a fine distinction made by economists.
Prices are what pay for costs — and if they do not pay enough to cover the costs, then centuries of history in countries around the world show that the supply is going to decline in quantity or quality, or both.
Ask almost any average salesperson what his or greatest problem or objection is and it is highly possible you will hear the word “price”.
“My prices are higher than that of my competitors’” or “Our prices are too high” are often the mantra or excuse for lackluster sales figures. Ask a superior salesperson however, and I suspect that you will find, in reality, she has learned that price is seldom the real issue.
How do we design our systems in such a way that we maintain a balance between our prices and our costs relative to market levels? For consumers, is the best price the best choice?
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