Pricing right is the fastest and most effective way for managers to increase profits. Consider the average income statement of an S&P 1500 company: a price rise of 1 percent, if volumes remained stable, would generate an 8 percent increase in operating profits (Exhibit 1)—an impact nearly 50 percent greater than that of a 1 percent fall in variable costs such as materials and direct labor and more than three times greater than the impact of a 1 percent increase in volume. - See more at: http://111.221.29.49/proxy.ashx?h=rDbJQ0MIBeWixZ_JLjgIPL86XDz8gpvb&a=http%3A%2F%2Fwww.mckinsey.com%2Finsights%2Fmarketing_sales%2Fthe_power_of_pricing#sthash.xfdsWpcZ.dpuf