Should you be increasing your prices?
If you adopt a premium pricing strategy the following table shows the amount by which your sales would have to decline following a price increase before your gross profit is reduced below its present level. For example, at a 40% margin, a 10% increase in price could sustain a 20% reduction in sales volume.
If your present gross profit rate is:
| 5% | 10% | 15% | 20% | 25% | 30% | 35% | 40% | 45% | 50% | 55% | 60% | |
| And you increase your price by: | To produce the same profit your sales may reduce by: | |||||||||||
| 2% | 29% | 17% | 12% | 9% | 7% | 6% | 5% | 5% | 4% | 4% | 4% | 3% |
| 4% | 44% | 29% | 21% | 17% | 14% | 12% | 10% | 9% | 8% | 7% | 7% | 6% |
| 6% | 55% | 38% | 29% | 23% | 19% | 17% | 15% | 13% | 12% | 11% | 10% | 9% |
| 8% | 62% | 44% | 35% | 29% | 24% | 21% | 19% | 17% | 15% | 14% | 13% | 12% |
| 10% | 67% | 50% | 40% | 33% | 29% | 25% | 22% | 20% | 18% | 17% | 15% | 14% |
| 12% | 71% | 55% | 44% | 38% | 32% | 29% | 26% | 23% | 21% | 19% | 18% | 17% |
| 14% | 74% | 58% | 48% | 41% | 36% | 32% | 29% | 26% | 24% | 22% | 20% | 19% |
| 16% | 76% | 62% | 52% | 44% | 39% | 35% | 31% | 29% | 26% | 24% | 23% | 21% |
| 18% | 78% | 64% | 55% | 47% | 42% | 38% | 34% | 31% | 29% | 26% | 25% | 23% |
| 20% | 80% | 67% | 57% | 50% | 44% | 40% | 36% | 33% | 31% | 29% | 27% | 25% |
| 25% | 83% | 71% | 62% | 56% | 50% | 45% | 42% | 38% | 36% | 33% | 31% | 29% |
| 30% | 86% | 75% | 67% | 60% | 55% | 50% | 46% | 43% | 40% | 38% | 35% | 33% |