Show SCIENCE CONSIDERING BUSINESS PROBLEMS New v Pricing Method Will Insure Adequate l Profits on Normal Production n By JOIN JOliN A A. A CRONE Copyright 1934 by The Telegram NEW YORK April Science Science 18 after after af- af ter conquering ma many y or of natures nature's forces Is turning its attention to the business world A science of pricing now is organized for lor the purpose of showIng business executives hoW to put their enterprises on a basis that will obtaIn adequate profits The keystone of the system is the economic right price and the application cation ot of its principles tens tells the business busi busi- ness man not alone what the right price for his product is but also how to get it The system has been developed developed de- de by W. W L. L Churchill industrial indus indus- trial engineer an early disciple or of the doctrine of industrial efficiency by waste reduction Prom Profit is the watchword or of the business engineer said Mr Churchill when interviewed at his office oUke Profit must be adequate and certain certain tain and must be earned on normal production Thousands of business S executives throughout the United States are mystified mys mys- by their failure to obtain pro profits prof- prof its but the reason is no mystery to the business engineer Sometimes the more business a concern does docs the themore more money It loses although itS cost system indicates it should be earning a handsome profit I Could Boost Profits I American business If enterprises were conducted on business engineering engineer engineer- ing principles they would earn 15 more profit a year than they now do This would mean the equivalent o of a year car more for lor every family in the United States It would not mean an any addition to the cost of living On the contrary it would start a cycle of reduction of costs Asked about the business pIes involved in an economic right price Mr Churchill set forth his gen eral philosophy on the subject It will generally that the major objective of every business busi j ness enterprise is to earn a profit he said It It also will be conceded that a fair profit is a profit that is large enough to enable the enterprise to per perpetuate itself itsel and to contribute its fair share to the progress ot of business business busi busi- ness and society and at the same time that is i not so large larce as to be r re regarded as exorbitant by the public It will be conceded further that few firms maintain a fair profit average aver aver- age over a period of years The primary mary reason for this lack or of profit is generally speaking neither inefficient production ion nor inefficient tion Where excess producing capacity is almost universally available and where such comp competitive factors actors as quality of product cost ot of production and marketing skill have been nearly if not entirely equalized an intensive competitive struggle for the available business is certain to arise Under these conditions low price is usually made the chief sales Inducement Induce Induce- ment and ond when aU all competitors attempt at at- tempt to underbId each other price pric e levels are soon reduced to or even below operating costs After having got themselves into this predicament business men ordinarily see see but one way some out method whereby the destructive forces of free competition can be brought under control and prices maintained artificially at a more sat level It will r believe be conceded again in that fiat prices cannot long be maintaIned by any Industry at least not hot in the United States even If J en cn- forced by law for a variety of reasons rea- rea sons sons which include Lack ot of support by public opInion lack of cooperation on the part of the business concerns involved lion tion on the part ot of less le drastically controlled or cheaper substitutes and the impairment of industrial morale In other words since American industry in in- cannot continuously earn a fair profit by its own own efforts and cannot cannot can can- not even do so with the help of the government conditions appear to be almost hopeless Now it Is my belief that all this desperate situation is fc merely the result re- re suit sult of following Ving false business prin Mr Churchill declared that correct business principles have been discovered discovered ered clarified d tested and pr proved and imd that their application would speed pro progress and stabilize e prosperity |