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Whenever sales get soft, you can bet that someone in your company will start pushing for a price cut. That's often a bad idea. A price cut may not generate enough new sales to make up for the loss in profitability per sales unit, especially when the market for your product is weak to begin with.

So how do you solve your sales problem without cutting prices? One way is to bundle a couple of products together, as Chuck Sussman of Pretty Neat Industries Inc. did when sales of his cosmetics organizer began to fall off. "I had already been planning to introduce a new version of the product, at about half the regular price," he recalls. "Instead, I priced the cheaper model at about 90%, shrink-wrapped the two products into one package, and stuck on a Day-Glo banner that said, 'Free $4 Value with This Purchase!' They sold like crazy. Customers kept the expensive product and gave the inexpensive one as a gift. And, of course, we wound up increasing our margins, not cutting them -- which is what would have happened if we'd cut prices."

Last updated: Oct 1, 1986




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