Small Firms' Pricing - the Neglected Art

Abstract

Dr. Alan Hankinson is Reader in Business Management at Portsmouth Polytechnic, England. This paper reports the findings of a study which examined the pricing behaviour of 60 small engineering firms in the Dorset-Hampshire region of Southern England during the period 1983-1985. Overall, the findings suggested strongly that the firms' pricing behaviour was generally inconsistent with goals of optimisation. The small firms in question appeared to ignore, and even avoid, opportunities for improved performances, financial or otherwise, through more effective pricing. The Dorset-Hampshire survey revealed endemic problems of pricing within the small engineering firm with up to 100 employees, but especially those in mechanical as opposed to electrical engineering. Almost inevitably as a consequence of these non-rigorous approaches, financial returns will tend to remain below optimum for the small engineering firm. Despite any limitations of the sample, data collection, data analysis, and interpretation, the total picture cannot be disregarded.