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 CONVENIENCE
CHOICE 3 COMPONENT: CHANGE ANCILLARY OR SUPPORT PRODUCT
| No. | SIC | Year | Notes |
| 1 | 3621 | 1997 | Baldor needs to have available inventories. Although most companies today are striving for just-in-time operations, Baldor believes that the benefits of having extra inventory outweigh the costs. It guarantees a 24 hour delivery time for most motors; it guarantees a 24 hour delivery time for most motors; it gets paid for it and its margins show it. |
| 2 | 4512 | 2004 | United is offering to double its Elite Qualifying Miles and Segments given for a period of about 2 months, as well as other benefits such as priority check-in, at the cost of a one-time fee of $150. |
| 3 | 4812 | 2005 | Cingular is the country's biggest cellular carrier. It netted more than 1.4 million new subscribers so it has a total of 50.4 million. The carrier's average monthly subscriber revenue fell to $49.59 but that is attributed to the popularity of its $9.99 a month family add-on lines, as well as other aggressive pricing plans. |
| 4 | 4812 | 1998 | Airfone charges $3.28 a minute for domestic voice-data and fax calls, as well as a $2.99 fee. AT&T levies $2.99 a minute and a $2.99 fee. These can be very high prices for the casual user. Business travelers may have corporate plans. |
| 5 | 4813 | 2005 | AOL has 22 million U.S. dial-up Internet subscribers. They pay $23.90 monthly. With VoIP, AOL hopes more of its customers will switch to higher-priced broadband services. VoIP requires a broadband Internet connection. AOL's service provides unlimited local and long-distance calling as one option. Existing AOL members would pay $30 monthly for VoIP after a lower-cost, six-month promotion period ends. For another $14.95, VoIP customers can also get AOL's broadband content, e-mail and instant messaging. Most people who try VoIP seek lower phone bills. AOL's prices are higher than those of Vonage and a few other startups, but are in line with those of phone and cable TV firms. |
| 6 | 4813 | 2008 | Both AT&T and MCI give two national listings for 99 cents, 41 cents cheaper than their older services at 555-1212. Connections are free, but after calls get patched through, consumers beware: AT&T and MCI each charge customers per minute fees as high as 38 cents and 28 cents respectively. |
| 7 | 5045 | 2000 | Nu Horizons' application engineers give technical support, product design help, and reconfiguration advice to its customers. That means that Nu can charge more for its services and receive higher margins. Its new operating margin is 4.6%, which is much higher than the industry average of 2.4%. "A field application engineer is very expensive. But given the shortage in the technology field these days, clients are willing to pay two to three times more for the service because of the added value. Field application engineers work very closely with clients. They're out there in the sales offices helping with product design. You don't find that with most distribution companies." |
| 8 | 5122 | 2006 | Pharmacy benefit managers (PBMs) say they are saving employers money while their own profits are rising. The clear numbers on how much PBMs pay for drugs and how much they charge for them are hard to find. However, some examples come from a Web site that Caremark runs. The site says it shows federal employees how much Caremark bills the government for many drugs. According to the site, 90 pills of generic Prozac cost $96.88 via Caremark's mail-order pharmacy. Pharmacies, whose business is threatened by PBMs, say those pills cost less than $5 to acquire wholesale. On its Web site, Costco Wholesale Corp. sells 100 pills of generic Prozac to retail customers who lack insurance for just $13.59. |
| 9 | 5411 | 1986 | Convenience stores charge high prices – 89 cents for a loaf of bread vs. 55 cents at a nearby supermarket – but provide service in a time-strapped society. |
| 10 | 5651 | 1997 | An apparel store created pricing structure in which low price for one product is inducement to buy other products. A suit might be priced low to induce customers to stock up on shirts and ties, which are priced high. |
| 11 | 5912 | 2004 | Some of the generic drugs most commonly used by seniors will still provide pharmacies a healthy margin. That's because pharmacies buy their generic drugs at very low wholesale prices but mark many of them up by as much as 2,000%, even for purchases made with a discount card. |
| 12 | 6021 | 1993 | Some NationsBank offices charge $5 for a money order, but any post office will sell a money order for 75 cents. |
| 13 | 6021 | 1991 | Sanwa Bank offers a no-points home loan. It saves you about 1.5% of purchase price at time of purchase, then raises interest over the life of the loan by .5% (10.5 v. 10). So, on a $250,000 house, the customer saves $3,750 but pays (assuming 20% down, 8% interest, and 30-year term) $890 per year more over the life of the loan–NPV of $11,044. At five years, the customer breaks even. Customers who keep their homes for fewer than five years realize a lower net price and receive higher savings. Customers who do not have the money to pay the points benefit from this (increasing the market for the bank). |
| 14 | 6141 | 1987 | Diner's Club will send through the mail "anything anywhere" for members who have enrolled in its Club Gift program. For a $45 annual fee, Diner's will call members on a monthly basis to remind them of dates, suggest gift ideas and ship the items. |
| 15 | 6311 | 2006 | Genworth Financial offers enhanced return-of-premium insurance which has a surrender value after 10 years. Subscribers can borrow from the account at this point and either pay it back with interest or never pay it back, essentially deducting it from the return of premiums at the end of the term. This plan is between 6% to 12% more expensive than traditional return on premium plans. |
| 16 | 8361 | 1997 | SNRZ provides supervision of and assistance with medication regimens of many of its residents. This program includes storage and distribution (to the extent allowed by local laws) of pharmaceuticals as directed by the resident's physician. SNRZ charges a fixed daily fee for the Medication Management service. This service is currently used by just more than half of SNRZ's residents. |
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