In the classic profitability decline cases usually there’s only a few possible solutions:
1. Lower your costs.
2. Sell more of your products.
3. Raise your prices.
Most people talk about the first two, but you’d be surprised at how few people mention the third.
I think it’s because usually in these cases you’re seeing a loss of volume or maybe prices went down or something like that. The intuitive response is simply to forget about prices because if they’ve gone down for everybody you probably can’t do much.
But, I’d argue if you automatically cross out this option you may be losing out on some really good solutions.
The reality is that raising your level of service or focusing on a specific customer segment along with raising your prices can be a good strategy to restore profitability as well.
Keep this one in the back of your mind for your next profitability decline case.