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February 21st, 2012 
admin In an economic slowdown your pricing is determined by factors like input cost of production or distribution channel cost etc. ….. which are primarily working on market factors. Generally one should be working on a reactive strategy of open price …. which allows for revision in product pricing over a shorter time period instead of quarterly or yearly market driven slashes or increases.
The important consideration is to try to maintain sales, even if some of them yield marginal or no profit (i,e, break even). In other words, so long as you are covering your costs, particularly fixed costs, then there is value in doing so.
However, unless you wish to become the low-cost leader going forward, then this low pricing may create a precedent which customers expect to continue, and it also may devalue the brand.
So pricing strategy must be decided carefully, with all things considered, including unintended consequences. And it may be better to have various incentives rather than simple price cuts in order to sustain sales.
In the article “Pricing in an Inflationary_Downturn”, McKinsey recommends the following actions:
-Watch for sudden shifts in price structure
-Adjust to changing customer needs
-Monitor customer-level profitability
-Update price sensitivity research
Many companies across the nation are on the verge of closing their doors and some have already started liquidating their inventory.
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In simple words budget is an estimation of all costs, expenditures and of course the profits you might incur in a specific time period, budgets are made normally on a yearly or quarterly basis. Just like any other plan, it’s better to put your financial plans in writing. It’s easier to analyze and improve a documented plan which is in front of your eyes instead of analyzing bits and pieces in your mind. A budget can also help in pinpointing the culprits (biggest expenditures); you can make changes on sheet and see the impacts in overall profit/loss of your business. Big businesses have got their financial experts to do this planning, however not all small businesses need to hire such experts. You can do it yourself by keeping in mind the following guidelines.
In simple words budget is an estimation of all costs, expenditures and of course the profits you might incur in a specific time period, budgets are made normally on a yearly or quarterly basis. Just like any other plan, it’s better to put your financial plans in writing. It’s easier to analyze and improve a documented plan which is in front of your eyes instead of analyzing bits and pieces in your mind. A budget can also help in pinpointing the culprits (biggest expenditures); you can make changes on sheet and see the impacts in overall profit/loss of your business. Big businesses have got their financial experts to do this planning, however not all small businesses need to hire such experts. You can do it yourself by keeping in mind the following guidelines.
