Pricing for Profitability: Activity-Based Pricing for Competitive Advantage

John L. Daly
Hardcover
288 pages
October 2001

From the Publisher:
Three things can happen when establishing a product price. A price set too high is a lost sale that could have been profitable at a lower price. A price set too low is rewarded with unprofitable work. Only when a price is set appropriately does a company make both a sale and a profit. Just as activity-based costing and activity-based management revolutionized the cost accounting world, activity-based pricing will bring a disciplined approach to developing pricing. Activity-based pricing examines the relationships between price, cost and sales volume and how this relationship effects profitability. Pricing for Profitability joins the disciplines of marketing, economics, business strategy, engineering and cost accounting to achieve maximum profitability.

Activity-based pricing will help you:

• Establish prices based on solid knowledge of customer demand and product cost
• Stop unintentionally pricing products at a loss
• Determine how much of a price is profit Use superior financial knowledge to generate superior financial return

Pricing for Profitability is intended for use by people from a variety of disciplines: marketing, sales, cost accounting, engineering, economics, and business strategy. While most pricing books approach pricing from a marketing standpoint, this book treats the entire pricing process from multiple points of view, to provide a broad understanding of how to use pricing to gain a competitive advantage.

Too many companies unknowingly price their products at a loss, sometimes a substantial loss, because they do not understand the important interrelationships of price and sales volume and sales volume and cost. This book offers a comprehensive treatment of these interrelationships that will make a difference in your bottom line. The tools and real-world examples included here will allow companies to consistently earn a profit on their products, no matter what that product is.

Organized so that it can be read at several different levels of detail, Pricing for Profitability will help anyone involved in the pricing process make more accurate–and more profitable–decisions.

Table of Contents include:

• Pricing for Profitability.
• Economics and Demand. Competitive Strategy and Pricing.
• Understanding Pricing Strategy.
• Costs.
• Activity-Based Costing.
• Activity-Based Pricing.
• Activity-Based Pricing Models.
• Influence of Capacity Utilization.
• Target Pricing.
• Price Negotiations.
• Conclusions and Summary.

JOHN L. DALY is President of Daly Consulting and Executive Education Inc., which provides consulting in pricing strategy and profit improvement. Executive Education Inc. produces continuing professional education seminars for financial managers. Mr. Daly is also a former manufacturing company CFO.