Pricing is one of the fundamental drivers of a business. It is worth shining a light on how it works within a business as any improvements in pricing go straight to the profitability line or as accountants say, they go straight to the bottom line.

The issues 

There is plenty to look at in pricing:

  • Are price points per customer optimised? Taking into account the competition how much demand is there per product, product group etc? Is the demand matched to the price you set?
  • How much management attention is given to discounts? Are there trade discounts (e.g. wholesalers get a standard 15% discount whereas retail gets 10%)? Are there additional trade deals with individual customers, such as volume discounts, seasonal price reductions etc? Do these discounts make commercial sense?
  • Who has the power to implement these discounts? If it is a sales function, how much management oversight is there?
  • Are any attempts made to measure the benefit of discounts or to establish how much discounts cost your business?
  • What type of analysis is done on credit notes? Are they categorised (price difference, incorrect goods sent, breakages, short supplied) and investigated to see if they can be reduced? Are they measured month by month?

What do studies show? 

It is interesting to look at a study done by Deloittes. They examined 100 case studies which focused on pricing and found that on average a 3.2% benefit was achieved. Some delivered over 20% while some delivered 1%.  

The study also showed that in many cases results were achieved within eight to ten weeks of beginning an investigation. What is also interesting about the study is that in examining businesses’ pricing policies, benefits were experienced in other areas such as marketing, order management, logistics and management accounting.

Management is the art of motivating staff, organising and controlling a business. Examining pricing can lead to substantial benefits – 3.2% pricing improvement means a 3.2% profitability gain.

Strengthening and controlling your pricing policy will result in an improved business.

© CA(SA)DotNews is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.





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IC Marais

Professional experience:

IC Marais is a certified CA (SA) with public sector and private sector technical knowledge based on 5 years’ Public Sector accounting, auditing and financial management experience and 5 years audit, tax and accounting experience. Detailed knowledge of private and public sector accounting and auditing standards (GRAP, IPSAS, IFRS, IAS, ISA) and public sector financial legislation (MFMA, etc.)

He enjoys the outdoors, hunting and fishing.


Professional experience:

In 1995, Schalk started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and then Mazars Moores Rowland in 2007) in Bloemfontein. In 1998, Schalk was appointed as manager at Moores Rowland, where he became a partner in 2003. Schalk received his Postgraduate Certificate in Advanced Taxation in 2006 and in 2009 he received his Certificate in the Administration of Estates.


Professional experience:

Cedric started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and Mazars Moores Rowland in 2007), Bloemfontein, in 1986. After completion of his articles, he joined the Special Investigations Division of the Department of Finance (SA Revenue Services) as a senior inspector from 1990 to 1991.


Professional experience:

Lucha started her career as a tax inspector at the Inland Revenue Department of New Zealand. After this she worked in commerce in Canada, Mexico and the United States.

On her return to South Africa, she completed her CA training contract with us and has been with Newtons ever since. She became a Partner in 2012.

Apart from her CA(SA) qualification she also holds a postgraduate certificate in Advanced Taxation (2005) and has the overall responsibility for training as our Training Officer.