So long as our prices are right we can sell to our full capacity; if our prices are too high we’re out of the market altogether; and if our prices are too low we are offering our customers a bargain at our expense, unnecessarily. If our prices are right, why do we sometimes fall below capacity when global markets contract?
That is because we are maintaining our productivity relative to the competition, but we’re not improving. The solution is not to lower your prices – in a depressed market that won’t get you many more customers, and those that you do get will probably be pinching their pennies. Rather, you want to get ahead by outgunning the competition, through improved productivity.