Roy's Blog: September 2012

September 17, 2012

What is the right thing: sales or profit?

“Selling fewer cars isn’t such a bad thing if you are actually making money.” says Angus MacKenzie, editor-in-chief of Motor Trend magazine reporting on sales if Chrysler vehicles in the US.

Brings up an interesting choice every business faces.

Do you want to drive sales by aggressive pricing tactics like promotional discounts, factory rebates and incentives?
Many organizations do this, not just car manufacturers. Mobility mompanies, for example, subsidize mobile handsets in order to get low price points. 

OR, do you want to accept a lower sales volume and use price to return a healthy margin from each sale?

image

You can’t continue to fuel top line revenue at the expense of margin.

Not a sustainable strategy.

You need a balanced approach.

Seed the market using creative pricing if you must, but always with a long term view of delivering value with positive margin pricing.

In my experience the company with the highest sustainable prices is the winner.

It’s the markets way of rewarding positive value creation.

Cheers,
Roy

Check out my BE DiFFERENT or be dead Book Series

  • Posted 9.17.12 at 09:16 am by Roy Osing
  • Permalink