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Posted on April 24th, 2014, by

The article Pricing Practices in Very Small Businesses (Dunn, Kogut and Short 35) is dedicated to the research of pricing policies of small firms. The authors intend to assess the extent to which the established economic principles of pricing that were initially developed for and by large organization are used by small organizations. This research is based on the data presented by the very small businesses in northeastern Louisiana.  The conclusion could be made that the majority of basic pricing principles adopted by large firms are also used by small businesses. (Dunn, Kogut and Short 35)

The important finding for me was the slightly different priorities of small businesses and large businesses in terms of pricing strategies. It appeared that small businesses experience significant influence of the pricing of their competitors and other cost-related issues.  This aspect is related to the material that we have studied in the Chapter 1: Five factors to consider when setting prices. The factors that were mentioned also included competitive factors and costs. But as it is claimed by Dunn, Kogut and Short (35) these competitive factors are particularly important for small businesses’ pricing analysis. It is also needs to be mentioned that the short term price reductions is a popular method of competition for the small firms. According to the results of survey cited by Dunn, Kogut and Short (35) 39.4% of the respondents claimed that have noticed a positive impact on sales as a result of use of this method.

I have found out after reading the article Pricing Practices in Very Small Businesses (Dunn, Kogut and Short 35) that the most significant difference in pricing strategies between small and large businesses was that small firms focus on covering variable costs. (Dunn, Kogut and Short 35) In addition, I need to note that small firms aim to achieve the satisfactory profit level rather than to maximize their profits.

 

 

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