[Executive Education, Inc. - Seminars for Corporate Financial Managers & Management Advisory Services]

How to give competitors the "dog" jobs and keep the "gravy" for yourself....

There are three things that can happen in pricing and two of them are bad. A product priced too high is a lost sale, while a product priced too low is even worse. Only when a product is priced right can a company both make a sale and make a profit. Many companies chronically make the mistake of over-pricing good high-volume work while under-pricing difficult low-volume jobs.

More sales may mean less profit. In the real world, profit is ALWAYS maximized at a price that is higher than the price that maximizes sales. Profit = Revenue - Cost and cost is never a constant. Doing a good job at pricing requires a strong understanding of both the the customer response to price factors that really cause cost in your organization. You company isn't doing a good job at pricing unless your marketing and accounting people are working as a team.

Using the right model can give your company a competitive advantage. Modern quoting techniques make sure that every job is priced to make a profit. A good quoting model will give you a competitive advantage on the gravy jobs that your competitors are over-pricing and allows you to avoid getting into a bidding war when your competition is already quoting a product at a loss.

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