Raise Price to Improve Revenues and Margins
CHOICE 1 OBJECTIVE: RAISE PRICE WITH NO CHANGE IN PERFORMANCE AND COST
CHOICE 2 ISOLATE SEGMENTS: CUSTOMER SEGMENTS WHO PURCHASE A PRODUCT ON A SPECIFIC OCCASION
CHOICE 3 COMPONENT: ADD AN EXTRA FEE ON TOP OF VARIABLE CHARGE
| No. | SIC | Year | Notes |
| 1 | 3711 | 1989 | Many manufactures lease their cars as well as sell them. Part of leasing price is a charge for early termination. |
| 2 | 4512 | 2008 | As airline ticket prices go up because of summer oil prices, frequent-flier miles have been losing their value (by adding fees for tickets and increasing mile costs). American began charging upgrade fees for business- and first-class upgrades bought with mileage. $50 is the fee for 15,000 miles and upgrading from discount coach, and an upgrade on an international 25,000 ticket costs $350 one way. Delta has a $150 fee for booking within three days of departure. If you cancel a trip Northwest charges $50, but United Airlines and Continental charge $150. US Airways charges $250. Airlines are not using programs to generate loyalty as much as to generate fees. |
| 3 | 4812 | 1998 | For $39.99, you get 90 Anytime Minutes plus 300 off-peak plus 500 Weekend Minutes (total of 890 minutes). Applies to digital plans only. "Early termination charge of up to $200 applies to all plans" hidden in small print. |
| 4 | 6021 | 1985 | Starting next month, Bank of America will charge $8 to open an IRA or to reinvest a time-deposit IRA that has lapsed. |
| 5 | 6141 | 1998 | Some big banks including Fleet, First Union and Mellon now charge as much as $25 to close a credit card account. |
| 6 | 6719 | 2007 | Researchers found that private equity firms that engage in buyouts receive the bulk of their income from fees. On average, leveraged-buyout funds can expect to collect $10.35 in management fees for every $100 they manage. Slightly more than half as much comes from carried interest, which represents the 20% cut of any profit that buyout firms retain for themselves after auctioning off a company, getting dividends from a portfolio or selling stock. When private-equity firms began in the 1980s, their fees were very low, from 2-3%, to fund operations. While investors sometimes balk at the high fees, they have little choice as the funds have greater returns than the public markets. However, some large clients including public pension systems and university endowments are pressing firms to reduce their management fees. |
| 7 | 7375 | 2007 | Customers who subscribe to a high-speed internet plan may be faced with termination fees of $150 or more should they decide to terminate the contract. The goal of fees is to reduce churn and recoup costs from benefits and equipment that customers receive free when they sign a new contract. Bundling may also make it expensive to back out of a contract. |
| 8 | 7514 | 1995 | National will offer new levels of discounts in Florida this spring. But now it will require travelers to reserve and pay for cars 14 days in advance and agree to a cancellation fee ranging from $25 to the entire price of the rental in order to get the bargain rates. The standard is not to impose cancellation fees. |
<<Return to Choice 3