General Considerations on the Influence of Prices on Business

Abstract

In most companies, there is an ongoing conflict between managers in charge of covering costs (finance and accounting) and managers in charge of satisfying customers (marketing and sales). Accounting journals warn on prices that fail to cover full costs, while marketing journals argue that customer willingness to pay must be the sole driver of prices. The conflict between these views wastes company resources and leads to pricing decisions that are imperfect compromises. Profitable pricing involves an integration of costs and customer value. To achieve that integration, however, both need to let go of misleading ideas and to form a common vision of what profitability means.decision, pricing, cost.