A framework for pricing decisions
Every manager knows that pricing is critical. Any percentage increase in revenues will normally have a much bigger impact on the bottom line than the same percentage reduction in costs. Yet even in the best-run businesses, it is surprising how often prices turn out to have been set by habit, instinct, or back-of-the-envelope estimates of competitive pressure rather than on the basis of rigorous analysis. Frontier has been engaged by several clients to set frameworks for pricing decisions, work that crucially begins with empirical analysis of the customer base.