Reduce Price to Improve Revenues and Margins
CHOICE 3: USE COMPONENTS OF PRICE TO FURTHER LIMIT THE SPREAD OF THE LOWER PRICE
D. Change the Optional Components of Price
Set a Price Cap
| No. | SIC | Year | Notes |
| 1 | 1629 | 2005 | In an industry where bidding on large-scale construction projects is typically on a cost-reimbursable basis-where contractors set their profit margin as a percentage of the project's overall costs-Chicago Bridge & Ironworks stands out. Before taking on a project, it sets a firm price for its customers. Their incentive: the tighter their grip on costs, the greater their profit margin. |
| 2 | 2834 | 2007 | In the U.S., Genentech capped the price of its cancer drug Avastin at $55,000 annually. Patients often stay on the drug for long time. The drug has healthy margins which allows the company to cut costs for the patients. |
| 3 | 4911 | 1995 | To keep their customers, Duke offers corporations flexible rates, and also markets hourly rates. |
| 4 | 6141 | 2003 | J.P. Morgan Chase and Morgan Stanley are both offering some customers 0% rates for life on balance transfers. Other companies are offering long-term low-rates. They hope that this will prevent customers from switching from low-rate introductory offers after the rate has been increased. These cards are ideal for diligent customers as late fees are very high and can cause the rate to jump from 0% to up to 19%. Many of the cards also require two new transactions per month and charge interest on these new balances. Payments go towards the original balance, causing interest to accrue on these charges. |
| 5 | 8111 | 2009 | Clients have argued for a long time that billing for each hour worked can encourage law firms to prolong a client's problem rather than solve it. When not paid by the hour, lawyers’ approach to their work changes. Morrison and Foerster negotiated a fixed fee for defending a company in court, covering work up to the point of a motion for summary judgment. The company made money, and the client was pleased. |
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