Raise Price to Improve Revenues and Margins

CHOICE 1 OBJECTIVE: RAISE PRICE, RAISE PERFORMANCE AND COST BY SMALLER AMOUNT

CHOICE 2 ISOLATE SEGMENTS: CUSTOMER SEGMENTS WHO REQUIRE A SPECIFIC PRODUCT SYSTEM COMPONENT

CHOICE 3 COMPONENT: CHANGE CONVENIENCE AND PRICE TOGETHER

No.	SIC	Year	Notes
1	3711	2003	Ford Motor Co. has boosted margins by encouraging buyers to spring for expensive extras and packages. The company uses software to calculate the combination that generates maximum profit and appeals to the most buyers. This strategy includes the introduction of limited-edition vehicles and cushy features on the Lincoln Navigator like a power running board and heated and cooled seats.
2	4213	2002	Schneider's CEO is now extending the business intelligence software across the company. Over 200 customers are tapping into the system through a tool called InterAcc that Schneider created using the BI software. For a small subscription fee, starting at a few cents per invoice, customers get access via the Web to cubes, analysis tools, and portions of Schneider's database so that they can track their own logistics.
3	5141	1996	Fleming raised prices high above the manufacturers on a range of products. Ex: a case of plastic grocery bags was $20.67, far higher than the $14 from the manufacturer.
4	5300	2007	Amazon launching new services, including Amazon Prime, to draw new consumers. The service offers unlimited two-day express shipping for free and overnight shipping for $3.99 for customers who pay a $79 yearly fee.
5	5411	1997	More prepared foods are being sold; because of the value-added component of labor in prepared foods, the average ticket is much higher than for commodity items.
6	5511	1991	Some dealers have raised profits in tough times by selling products like rustproofing, paint sealants, fabric protection, extended warranties.
7	5731	2004	For a Satellite laptop PC that sells for just under $1,000 Toshiba Corp. charges $199 for a three year plan that also covers such accidental damage as dropping the laptop or spilling a liquid on the keyboard. CompUSA wants $369.99 for the extended warranty alone.
8	5961	2008	Airlines have long known that business travelers will pay higher fares in return for maximum booking flexibility, and that leisure travelers are willing to give up some flexibility in order to pay less. The lesson for e-tailers: They, too, can reap rewards from managing demand—in their case, by segmenting customers according to how they want their goods delivered. People who shop online can differ greatly in what they're willing to pay for delivery, and how flexible they can be on the time and date, when they have to be home to receive the package. If e-tailers adjust their fees and delivery options accordingly, they can not only increase revenue but also efficiency. The more delivery time slots one can choose from, the more attractive the service is for the customer, potentially increasing sales. The most obvious tool for segmenting customers is the delivery fee. Discounts should be offered for less-desirable slots to smooth demand. Prices can also vary based on the width of the time slot (hours during which the recipient can receive the shipment), with bigger discounts for wider time slots.
9	5999	2004	CompUSA charges $17.99 for a two-year replacement policy on $59.99 Netgear Inc. wireless router for home networks-even though Netgear's warranty will repair or replace it free for three years.
10	6211	2002	Schwab charges $400 for an analysis of client's holdings and a couple of hours worth of advice. Schwab also manages a client's money for a yearly fee based on assets. But competition is fierce.
11	6552	2006	Fractional-ownership usually requires an up-front purchase price, usually several hundred thousand dollars in addition to an annual maintenance and service fee. Often, spa and golf services are separate. The Ritz-Carlton of Florida requires members to pay an initiation fee and annual dues to play on their private court.
12	7375	2004	While many search ads cost less than a dollar a click, personal-injury law firms looking to land new clients have bid up mesothelioma ads to $90 or more.
13	7375	2004	AOL had been selling an antiviral tool from McAfee Inc. for an extra $2.95 a month, and had signed up some two million of its users. MacAfee sells the same software to consumers on its Web site for $39.99 a year.
14	7991	2009	Health clubs are another area where people have added services. On average, membership costs have fallen- to about $402 a year in 2007 from $422 in 2003. But overall health-club revenue was up, largely because members were buying more services, including personal training, massages and nutrition counseling.
15	8062	2002	By the mid 1990s, insurers had begun to offer point of service HMO products: after paying a premium of 6-8 percent over the standard fee. 20% of the HMO policyholders have taken up the option of seeing specialists outside the group with a doctor's referral, but fewer than 5% of the point-of- service subscribers actually exercise it.

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