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Monthly Archives: October 2011

Develop the best pricing strategy and structure-“Minimum Acceptable Profit (MAP)”

29 October, 2011 – Articles

There are multiple pricing structures and strategies available to implement. There is not a universal formula applicable to every single organization. For instance, a smaller company with hopes of integrating a larger market may engage in Price Penetration strategies. With this approach, a low introductory pricing tactic may be best to lure in new customers.

On the other side, a more well-known company may use a Differentiation Pricing strategy. In this case, the strength of the brand may warrant a premium pricing strategy without fears of losing the acquired market share to less established companies.

Nevertheless, the majority of organizations use Cost-Plus pricing which is simply adding a mark-up on top of the cost of production/servicing. The goal of this pricing strategy is to earn simply a profit from operating a business. The only problem with this strategy lies in the realm of long-term feasibility. For example, earning a 1% in profits may accomplish the general expected goal but may not result into sustainability.

Because of this inefficient strategy, we will propose the concept of “Minimum Acceptable Profit (MAP)” regardless of the pricing strategy. The MAP is the established and exact threshold/milestone of profitability a company must attain so to warrant its existence. In terms of operating a successful business, it should be unacceptable to engage in any pricing methods that does not provide a MAP. If for example the targeted MAP is 20%, then the pricing structure must reflect this objective. Here the strategy is to categorize the MAP as cost center. Just like paying for the mortgage/lease or the electric bill, this MAP is the most important cost above any other. This MAP should be the first cost a company must pay first and with what is left cover the rest of the expenses. This will guarantee constant profitability.
Now, what happens if after paying for the MAP, there isn’t enough left to cover the rest of the costs? The answer is simple: The company must revisit its overall business model.

If a company must lower its established MAP standard so to pay for other costs, then its chances of long-term survival will be slim. Just paying bills and thriving to stay above water is a losing strategy to begin with.

Fact:

The accumulation of wealth and retained earnings are indispensable to long-term existence and amassing the MAP consistently is the only route. The lack of accumulated wealth is one of the main reasons why the majority of small businesses fail within seven years of operation. These businesses can never build enough prosperity to sustain economic downturns and market shifts. The ultimate benchmark is to secure the MAP for any effective pricing strategy. Once the MAP is reached, then any other pricing strategies may be acceptable as market situations evolve.

In conclusion, any pricing strategy is acceptable as long as the MAP is outlined as the most essential cost for the organization.

Is it too radical to classify the MAP as a cost?
Think about it for moment…It is the surest route to guarantee its realization.

 
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Posted by on October 30, 2011 in Tax Relief

 

Stand with Occupy Wall Street

Not a single banker has gone to jail for crimes that led to the financial meltdown. But now over 1,000 protesters have been arrested in the inspiring Occupy Wall Street protest in New York City.

Tell Mayor Bloomberg and Police Commissioner Kelly: Respect the Occupy Wall Street protesters’ constitutional right to peaceful assembly.

The occupation of Wall Street has inspired a nationwide movement in the spirit of Wisconsin.

But there has been a powerful backlash against peaceful protesters who are using both their right to public assembly and tactics of nonviolent civil disobedience to call attention to the fact that our government has bailed out the wealthiest Americans but has done little to help middle and working class Americans who have lost their jobs and had their homes foreclosed on.

The protest is building momentum with solidarity marches that CREDO and Other 98% members, progressive organizations and labor have joined. However the very existence of Occupy Wall Street could be endangered by strongarm NYPD tactics aimed at intimidating protesters and ending their three week stand against the big Wall Street banks.

Tell Mayor Bloomberg and Police Commissioner Kelly: Respect the Occupy Wall Street protesters’ constitutional right to peaceful assembly.

Many of the rank and file “blue shirts” of the NYPD have shown great poise, respect, and even moments of solidarity with the protesters. After all they are members of the 99 percent of America that has been victimized by Wall Street.

However, NYPD leadership has used brutal techniques to break up the protests. In an incident last week, a police officer attacked nonviolent protesters with pepper spray. There are multiple videos of the attack on four women protesters who did nothing to provoke the officer’s action. The New York Times reported that the officer in question “looked as if he were spraying cockroaches.”1

The officer involved in that attack was not a rank and file cop. He was a deputy inspector with supervisory responsibilities for the police action. What’s more, he has a history of violating the civil rights of protesters and is currently facing legal action for accusations of wrongful arrest and civil rights violations at the 2004 Republican National Convention demonstrations.2

Tell Mayor Bloomberg and Police Commissioner Kelly: Respect the Occupy Wall Street protesters’ constitutional right to peaceful assembly.

There have been other incidents of police abuse. But the documented attack on protesters by a high-ranking NYPD officer demonstrates that this is incident isn’t simply the collateral damage of a tense and confusing situation. The police are roughing up protesters in an attempt to break up the Occupy Wall Street protest.

Tens of thousands marched in solidarity with the 99 percent and the Occupy Wall Street protesters. But we must ensure that now the march is over and the news cameras are out of sight that the police do not continue their campaign of violence and intimidation to stop the momentum building at the Wall Street protests.

Tell Mayor Bloomberg and Police Commissioner Kelly: Respect the Occupy Wall Street protesters’ constitutional right to peaceful assembly.

We have heard from our friends on the ground that the most important thing people can do who cannot come down and support the protests in person is to ensure that the Mayor and the Police Commissioner do not drive them out of the park which is serving as the base for Occupy Wall Street protests.

It’s important that the Mayor and Police Commissioner know that the eyes of people across the country are on them, and that we consider it an attack on democracy and not just an individual protester when the NYPD systematically uses intimidation and violence with the intent of suppressing the ongoing protests.

1. “A Spray Like a Punch in the Face,” Jim Dwyer, The New York Times, 09-27-2011.
2. “NYPD Pepper-Sprayer Hit Fellow Officer With Friendly Fire, Has Prior Protest Complaint,”Joe Coscarelli, New York Magazine, 05-12-2011

Sign the petition

The petition reads:

“Not a single banker has gone to jail and yet over 1,000 protesters have been arrested. I stand with the protesters of Occupy Wall Street, and I demand that the NYPD respect their constitutional right to peaceful assembly.”

 
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Posted by on October 8, 2011 in Tax Relief