PRICES

 A pricing decision that is not made on the spot may adversely affect profitability.

 For example, a higher price leads to an increased profit margin per unit. However, a possible         decrease in sales may result in higher cost per unit and loss. For this reason, in some cases, low pricing that will keep the cost low and increase the competition limits may be preferred. In fact, businesses may decide to increase again after reducing the price to gain the market share of their competitors and gaining customer loyalty.

As a result of a price increase with an accurate pricing strategy, it can move to a profitability where the margin is high enough to compensate for the possible decrease in sales volume. We can better see the importance of correct pricing by looking at the following data: According to an article published in the Harvard Business Review, a 1% price improvement leads to an 11.1% increase in firms' profits.

Cost-based pricing is one of the easiest methods of price determination that enables to take a strategic step.