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Pricing
Business
WHAT IS IT?
Pricing is the process of deciding what to charge for a product or service.
IN PLAIN ENGLISH
It is not simply choosing a number; it needs to reflect costs, margin, customers, competition and the value being offered.
SIMPLE EXAMPLE
If a meal costs £5 in direct costs and sells for £15, the price creates £10 of contribution before other costs in the example.
WHY DOES IT MATTER
A small price change can have a large effect on profit when multiplied across many sales, but pricing decisions also need to consider demand and the market.
THE ROCKET TEST
Pricing is deciding what to charge while understanding what that price does to your numbers.
SEE IT IN ACTION
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