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How Do You Know That Your Pricing Is Not Right? The Hamster Cage Syndrome

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A company in the United States fabricated large metal tanks for several major industrial manufacturers. With two of its three major customers, it made a profit on the tanks. On the third contract, the largest of the three customers, the company lost money. The result was the company struggled to pay its bills but looked “sexy” because it had large revenue volumes. When a company is really busy but the dollars just flow through the bank account leaving nothing at the end of the year, the prices may be too low. Here the owner of the business runs and runs all day on the “wheel” like a hamster and goes nowhere.

Pricing Strategies for Small Business

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