Reduce Pricing and Improve Profits with Contribution Pricing
The concept of contribution pricing was introduced in "Profitable Applications of the Break-Even System" by college professor and accountant, Carl L. Moore. That was back in the 1970's when Professor Moore realized that costly downtime could be greatly lessened, even eliminated, if a source of work could be found that would minimize sporadic periods of equipment and personnel inactivity. In the print industry, this break-even point is normally reached when around 70% of equipment capacity is sold at normal prices. Then, every dollar generated past break-even becomes bottom-line profit. This means 30% of a printer's production can be made profitable with discount pricing, provided, of course, that the discounted work does not replace higher priced work.
- People:
- Carl L. Moore
- Deborah Snider