SM1.0 How 1% Price Change Gave 11% Profit Increase

Price is a major determinant of the profitability of your business!  A price change of as little as 1% can often lead to profit increases of up to 11%.  A consultant study across 1,200 major businesses found that a 1-2% increase in price, assuming demand remained constant, on average would have increased the company’s profit by 11%. Clearly, this could be a quick boost to your company’s profitability.

For a quick example of the impact of a price change, consider a business turning over $500,000 per year.  Let us further assume that it makes a 5% profit on that, which gives it a profit of $25,000. If it increased its price by 1%, and assuming demand remained constant, that would lead to an extra \$2,700 in income. This extra \$2,700 over the original \$25,000 is a 11% improvement.  This is a yellow belt article.

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The Price Change Skills Module teaches how a small price increase can have a dramatic effect on your Profit.
Learn about the three step approach to pricing, pricing elasticity and economies of scale amongst many others.

SM1.1 Rapid Profit Increase from Price Change
SM1.2 Longer Term Pricing Systems

Get a better idea of how to calculate the impact of price change in this article.