Discontinuing an unprofitable customer should be solely done on the basis of profitability.

Question

Quizplus · Accepted Answer

There may be strategic reasons to retain unprofitable customers and and managers must use caution when allocating fixed costs to unprofitable customers. In addition., some customers might be dropped, not because of profits but because they might be congruent with the company's strategic plans or fall outside a company's target market or require unsustainable high levels of service.

Discontinuing an Unprofitable Customer Should Be Solely Done on the Basis