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Table 8: Profitability Ratios

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How does this apply to pricing? Having a keen perception of the downside of a contract may help you make shrewd business decisions rather than fatal ones. At the beginning of my career I was told that a bad business decision is one you cannot back away from gracefully. An appreciation of the risk may persuade you not to change the overall value of the package of goods and services but rather to unbundle them to reflect your risk and rewards.

In other words, how can you legitimately give value to your customer in providing services or products outside your normal course of business and see some of the profit for doing so hit your bank account? At the same time, how can you place a wall between you and the outside provider so that his or her poor performance or bad luck does not have a disastrous impact on your business?

Pricing Strategies for Small Business

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