Originally posted by plawrence: Are the prices we charge 20% more than they are willing to pay (10/50)? [b]or
Are the prices they are willing to pay 16.7% less than we charge (10/60).
Obviously, both statements are correct, but which do you think would be more correct if I was explaining the pricing structure to a third party? [/b]
Like you said, both are correct, but I would go with the second one on this one. Here's my reasoning:
- The only reason to explain this situation to someone is to give a decision maker all the facts necessary to make the decision of taking the business or not. - Your own rate (i) is set in stone, (ii) the number the decision maker knows best, and thus, should be the one compared to. - The 16.7% number is the "loss" you would take by taking this business. - The decision maker can decide if 16.7% is an acceptable loss.
This reasoning doesn't work with the 20% number, in my opinion. I guess it depends on who the third party is.
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