Any sort of action is to be taken when one faces a downfall in revenue. In such an economy which is growing slowly there are certain reasons to be assumed that if prices were to be lowered one should sell be selling more and should be increasing the revenue and the profits too. But this might be true in certain cases while in others it might not be true.
There may be certain things that must be taken into consideration in order to see whether by lowering the prices more volume is being generated or not.
Variety of prices
Prices do matter because there is a very large range of prices that every customer has to pay. But for most of the customers prices don’t matter for the product which they are able to afford easily. A variety of customers may be choosing from providers for a number of other reasons than price. This may include customer service, those sales people which are responsive, choosing a wide range of product and services or they may have the habit of a specific place from where they are usually shopping from.
If a person is considering a change in price strategy and he is not able to know that how a specific market is going to respond then pone should survey the specific market in order to predict a number of results.
One may not be able to base their pricing decisions on that sample of a small business which is lost. One has to do that analyses which is a detailed one. It should be such an analysis which is considering the loss and the win ratios, including number of those customers who are being affected, it should also include transaction size. These analyses must be done by segment.
If some sort of approach is applied which is scientific in nature then it will explain that lower profits are a result of lower prices. A person may also find such an area in which the prices set by a certain provider are high and one may be able to get greater profit if he is willing to sell his products at a price which is lower so more volume can be generated.