implementing service differentiation, direct sales and promotion.
by august j. aquila
economists define demand as a schedule of the various amounts of an item (a good or service) that buyers will purchase at different price ranges during a given time period. according to the theory of price elasticity of demand, there is an inverse relationship between price and the quantity of an item bought. in other words, as the price of a service decreases, the quantity demanded increases and as the price of a service increases, the quantity demanded decreases.
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it’s very difficult for professional service firms to increase demand by offering a special pricing. for example, if a law firm offered a discount divorce, would happily married couples look for a divorce, or if an accountant offered a lower price for an irs tax examination, would people who did not receive a notice be at all interested?. in short, it has been difficult for most cpa firms to accurately estimate the demand for their services.
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