America's fastest growing companies raised prices by less than one percent in past year, reports Coopers & Lybrand L.L.P.

NEW YORK--(BUSINESS WIRE)--April 16, 1997--

Coopers & Lybrand's "Trendsetter Barometer" interviewed CEOs of

458 product and service companies identified in the media as the

fastest growing U.S. businesses over the last five years. The

surveyed companies range in size from approximately $1 million

to $50 million in revenue/sales.

Despite stock market jitters over the prospects for inflation, America's fastest growing companies have been holding the line on prices. Although more than half of "Trendsetter" growth firms (56 percent) increased prices for some of their products or services in 1996 and nearly one-third (31 percent) decreased prices, the net impact of all price adjustments was less than a 1 percent (0.9 percent) increase for the year. These are the findings of the latest Coopers & Lybrand "Trendsetter Barometer" survey, released today.

Seven in ten growth firms surveyed (72 percent) changed some of their prices over the past year: 56 percent imposed selective increases and 31 percent made decreases. Among these, 15 percent both increased and decreased prices of some items in their lines.

"This modest level of aggregate upward price movement over the past year is hardly inflationary," comments Ed Galvin, Midwest cluster partner-in-charge, Entrepreneurial Advisory Services for Coopers & Lybrand. "Trendsetter companies are telling us that in today's economy the offsetting pressures for price increases and decreases are keeping inflation in check -- the free-market system seems to be working."

Overall, the price adjustments impacted a quarter (26 percent) of all products/services sold by "Trendsetter" firms: 18 percent increased and 8 percent decreased. Price-increasing growth firms raised the cost of 32 percent of their products/services, while price-decreasing firms lowered the cost of 26 percent of theirs. The average price increase for affected products/services was 10.1 percent; the average price decrease was 10.9 percent. In total, there was a composite price increase of 1.84 percent and an offsetting decrease of 0.87 percent, resulting in a net increase of 0.97 percent for all products/services over the past year.

Coopers & Lybrand's "Trendsetter Barometer" found that price-adjusting firms are twice the size of their peers (319 employees compared to 153), with larger revenues ($35 million versus $14 million). Despite their much greater size, in the next 12 months these firms expect to grow 8 percent faster than the non-price-adjusting firms (29.6 percent compared to 27.5 percent).

Price-increasers have a productivity edge over price-decreasers, with revenue per employee at $138,000 compared to $87,000, or 59 percent higher. Additionally, profit margins have been improving for price-increasers over the past year: 45 percent increased their margins, while 22 percent saw erosion. In contrast, only 29 percent of price-decreasers improved their margins, and 39 percent saw their margins decline.

"Price-increasers are looking to maintain above-average revenue growth, productivity and profit margins," says Galvin. "In contrast, price-decreasers tend to have lower growth prospects and are attempting to keep pace at the expense of current margins."

Triggers for Recent Pricing Adjustments

"Trendsetter" firms that increased prices over the past three months were motivated by three factors: the need for better profit margins (cited by 59 percent), the opportunity to respond to competitive price adjustments (45 percent), and cost changes of key components or ingredients (43 percent). Price-decreasing firms listed competitive price cuts (cited by 74 percent) and cost changes of key components or ingredients (42 percent) as their two main reasons for reducing prices. Customers demanding permanent price rollbacks and quantity discounts also influenced price-decreasers.

"In today's marketplace, very few "Trendsetter" price changes -- only 13 percent -- were made as a result of scheduled reviews conducted at prescribed time intervals," notes Galvin. "Most price-increasers are using their adjustments to achieve better profit margins, while most price-decreasers are reacting to competition."

Field Sales Forces Gaining More Pricing Decision Powers

Over the last two years, field sales organizations have gained more flexibility to lower or increase prices. Currently, 66 percent of all "Trendsetter" field sales forces have the freedom to lower prices to meet competitors (seven points higher than in 1994). Similarly, 61 percent are now empowered to increase prices to competitive levels (10 points higher than 1994).

"Transferring pricing capability to field sales forces is a necessity for growth firms looking to compete more effectively," says Galvin. "For many, this adds a new dimension to management operational philosophies and implies a need to design management systems capable of quickly measuring the profitability of such actions."

CEOs Have Differing Approaches Toward Pricing New Products or Services

In determining the base price of an important new product, Coopers & Lybrand found that 60 percent of growth firm CEOs try to find the perceived value or worth to the customer via informal assessment rather than formal research studies. Pricing of directly comparable items already in the marketplace and a cost-plus philosophy are also important factors in setting a new product's base price (cited by 51 percent and 46 percent, respectively). Only one-third of growth firm CEOs say uniqueness or the need to improve profit margins directly effects price determination.

"Trendsetter" firms using perceived customer value as an approach to new product pricing expect revenue gains of 31.7 percent over the next 12 months (9 percent above average). Growth firms that price new products based upon uniqueness expect even stronger growth: 35.2 percent (21 percent above average). "In comparison, growth firms pricing new products to enhance their overall profit margins have lower revenue expectations, 30.9 percent," adds Galvin.

Coopers & Lybrand's "Trendsetter Barometer" is developed and compiled with assistance from the opinions and economic research firm of Business Science International.

One of the world's leading professional services firms, Coopers & Lybrand L.L.P. provides services for enterprises in a wide range of industries. The firm offers its clients the expertise of more than 16,000 professionals and staff in offices located in 100 U.S. cities and, through the global network of Coopers & Lybrand International, more than 74,000 people in 142 countries worldwide. -0-

If you would like to learn more about Coopers & Lybrand L.L.P., our Internet address is : http://www.colybrand.com

(If you would like a copy of the accompanying chart, please call Marcy Brucellaria at 212-259-2109)

CONTACT: Marcy Brucellaria

Coopers & Lybrand L.L.P.

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