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Eastman Kodak Study
If  you’ve ever wondered how much business must increase in order to keep an even keel after cutting prices, here are some figures from Eastman Kodak's research department:

Assuming an anticipated profit of 25% on selling price, a 2% cut in that selling price means you must increase your volume of sales by 8.7% to make the same profit obtained before the price was lowered.

A 3% cut means a 13.6% increase in sales is necessary.

A 5% cut means a 25% increase in sales is necessary.

A 7.5 cut means a 42.8% increase in sales is necessary.

A 10% cut means 67% increase in sales is necessary.

A 15% cut means a 150% increase in sales is necessary.

A 20% cut means a 400% increase in sales is necessary.

 

To reverse the process, or increase prices:

A 3% increase means the same profit on 90% of sales volume.

A 5% increase means the same profit on 83.5% of sales volume.

A 7.5% increase means the same profit on 77% of sales volume.

A 10% increase means the same profit on 71.5% of sales volume.

A 15% increase means the same profit on 62.5% of sales volume.

A 20% increase means the same profit on 55.5% of sales volume.

 

Stop and think about it.            

 

R.L. Frazer & Associates, Inc. * PMB 176 * 4815 W. Braker Ln.  Ste. 502 * Austin, TX  78759-5618 * 512/346-0455 * Fax 512/346-1071   






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