Effective pricing and the profitability of organisations

Pricing decision has been a crucial decision made by all business enterprises at all levels and has posed a great challenge for Small and Medium Enterprises in Nigeria. This research work treats the impact of pricing on the profitability of organisations, a study of small and medium enterprises in Nigeria. The methodology adopted was the survey and empirical approach, with the administration of questionnaires to some SMEs in Nigeria, with a close emphasis on the SMEs in Lagos and Ogun stae, Nigeria, evaluating the effect of change in the product price on profitability, thereby measuring the relationship that exists between the two variables. The financial report of a sample company was also evaluated to measure the significant impact of pricing on profitability. The Pearson Correlation Coefficient statistical tool was used, as well as the student t-test, to measure the relationship that exists between the variables and how significant the relationship is. The profitability ratios were also used to measure the impact of change in price on the profitability of the sample company. The work found that there is a relationship between effective pricing and profitability.