Price for sustainable profit

Set prices with an understanding of both customer value and the economics of delivering that value. Consider what customers will pay, what alternatives cost, and the expenses involved in sourcing or producing, selling, delivering, and supporting the offering.

Account for discounts, returns, rework, and ongoing commitments where relevant. Use realistic sales volumes to judge whether the business can cover its operating costs and earn an adequate profit.

Consider how each offering contributes to the wider business, including the time and capacity it consumes. Review prices as costs and demand change, and make deliberate decisions about the balance between sales volume and profit.