Raise Price to Improve Revenues and Margins
CHOICE 1 OBJECTIVE: RAISE PRICE, RAISE PERFORMANCE AND COST BY SMALLER AMOUNT
CHOICE 2 ISOLATE SEGMENTS: DUE TO A UNIQUE FUNCTION
CHOICE 3 COMPONENT: CHANGE RELIABILITY AND PRICE TOGETHER
| No. | SIC | Year | Notes |
| 1 | 2389 | 1992 | VF managers sell different brands (different prices points) to specific retailers. Upscale brands like Girbaud jeans are sold to upscale dept. stores, while Wrangler and Rustler are sold to discount stores. |
| 2 | 2834 | 1995 | Glaxo priced its Zantac at a 50% premium over its competitor, Tagamet. It relied on the product's perceived value to the customer, to sell: it is easier to use, has fewer side effects, more compatibility with other products. Add price point. |
| 3 | 3465 | 1990 | Johnson and GNB make backup batteries, with built-in reserve power systems that start an engine when the main unit fails. It's almost twice the price of a normal battery. |
| 4 | 3571 | 1987 | Digital to introduce three new superminicomputers; the new VAX 8800 leapfrogs Digital back into the lead for the fastest machines in its class. The new machine is nearly twice as expensive as Data General's machine, even though only 20% faster. |
| 5 | 3621 | 1997 | Baldor not only offers broad application motors but also produces motors, in small lot sizes, that only fit the needs of one customer or a small group of customers. Approximately one third of what it sells is custom product. Baldor has been following this strategy for many years and now has a database of drawings for more than 90,000 motors. It utilizes this database to lower the costs and shorten the lead times (now at four to six weeks) of manufacturing a customized motor. Management believes it is compensated for the costs of providing such service through higher margins and, just as important, through customer satisfaction that it can leverage into additional sales. |
| 6 | 3949 | 1989 | The difference between mid-and high-price point skis is purely cosmetics and name (performance is about the same). Mid-price point seems to be around $300, but high end skis sell for as much as $1,000. |
| 7 | 4011 | 2002 | Union Pacifiic intermodal business developed a product called "blue streak". This product promises to get shipments from one location to another much faster, more comparable to the time a truck takes. Because of this faster time, the "blue streak" product is able to charge up to a 40% premium over normal rail service, but the service costs Union Pacific only slightly more than normal to deliver. |
| 8 | 6324 | 2007 | As payments from European state-run health care systems diminish, some pharmaceutical companies promote pay-for performance. Johnson & Johnson has promised to reimburse various health programs in Britain and France when patients don't respond to the treatments. Drug companies are promoting these deals because they fear that lowering prices would set precedents that would encourage drug insurers worldwide to demand further price cuts. |
| 9 | 7372 | 2009 | Oracle's lucrative business selling maintenance contracts could come under pressure if companies turn to lower cost alternatives as the recession drags on. Customers pay maintenance fees to Oracle and rivals like SAP for the right to get upgrades to their products, bug fixes and help-desk support. The contracts typically come up for renewal every year and are paid for annually. Oracle charges a fixed 22% of the price of a software package which can cost hundreds of thousands of dollars. |
| 10 | 7375 | 2009 | Labor-at-the-keyboard sites are gaining popularity as people increasingly turn to the Web in search of work. LivePerson, one such site, vets contributors' qualifications, such as medical licenses or financial certification, through a third party. It relies heavily on its community reviews. After applicants are cleared, advisers work with clients on a cost-per-minute basis. The site takes a commission of between 30% and 35%. |
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