Raise Price to Improve Revenues and Margins
CHOICE 1 OBJECTIVE: RAISE PRICE WITH NO CHANGE IN PERFORMANCE AND COST
CHOICE 2 ISOLATE SEGMENTS: DUE TO A UNIQUE FUNCTION
CHOICE 3 COMPONENT: CHANGE THE BENEFIT PACKAGE
| No. | SIC | Year | Notes |
| 1 | 2834 | 1993 | Big drug companies thwart clones by refusing to allow generic rivals to imitate the appearance of branded drugs (people are afraid to switch from a round blue pill to a long white pill). |
| 2 | 2893 | 2005 | More retail cartridge stores are springing up as consumers look for cheaper refills. Currently, a new cartridge from HP, Canon, or Lexmark costs more than an ounce of Chanel No. 5 or Dom Perignon champagne. Most of Cartridge World outlets offer refills and clones that are cheaper than brand-name cartridges. The cost to refill a brand-name product usually runs 40%-60% of the cost of a brand-name product. An HP inkjet cartridge costs $30, but a refill at Cartridge World in Texas will cost only $16.50. |
| 3 | 3021 | 2004 | The athletic footwear industry has been trying to increase prices to curb a retro fashion trend towards less-expensive Converse, Vans and Keds. |
| 4 | 3599 | 2007 | A new product from Intuitive Surgical is allowing doctors to perform safer and less traumatic prostectemies. The surgical system is the only one of its kind approved by the FDA and rivals are years away from FDA approval. Intuitive Surgical has generated high revenue and its newest model, the S-series has jumped in price by 16% annually. The company also benefits from the sales of accessories, service and training. Recurring revenue accounts for 51% of the company's sales. |
| 5 | 4512 | 1987 | When American lost revenue by curtailing "display bias," it made up for losses by imposing higher charges on some competitors for each reservation on their flights made through Sabre. Sabre revenue nearly doubled as a result. |
| 6 | 4813 | 2002 | MCI's Neighborhood Plan wraps long distance and local service into one plan with one price. Customers pay a flat fee of between $49.99 and $59.99 a month and can make unlimited calls. Verizon and AT&T's plans charge extra for long distance. This initiative may gain back customers from "wireless substitution." |
| 7 | 5411 | 2004 | By paying closer attention to customers' habits, HEB has been able to maintain low prices on basic staples by charging more for specialized products, evening out profits. |
| 8 | 7372 | 2001 | Before 1995, pricing in the software industry followed a fairly consistent model. Companies charged as much up-front as possible. $250,000 seemed to be the base price to account for the cost of a direct sales team. Customers also were charged about 18% per year of the original purchase price to account for maintenance and customer support. Every few years, a major upgrade would be released, requiring customers to make another large investment. |
| 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. Oracle's maintenance revenue is likely to be resilient in the short term. The company's software is used around the world, and many of Oracle's customers depend on the company's support. Oracle reports that maintenance "renewal rates remain very, very high, because the software is usually absolutely critical for them to continue operating. Investors prize Oracle's maintenance and service contracts which generate margins of roughly 85%. |
| 10 | 7812 | 2002 | Some have proposed that studios release new DVDs to rental outlets several weeks before retailers. However, studios fear upsetting Wal-Mart which buys large quantities of DVDs and keeps them at low prices to bring customers into the store. Studios may move towards price increases on smaller releases and older movies which have limited ownership appeal. |
| 11 | 7941 | 2006 | The New York Jets are joining with eBay to auction off licenses to 2,000 of the best seats in the stadium the team will share with the Giants, a new approach that will test the limits of what football fans will pay for top-of-the-line seats. Personal seat licenses (PSLs) give fans the right to buy season tickets for a certain seat for the life of a stadium. The fan owns the license and can sell or transfer it, though the secondary market for PSLs has been mixed. The popularity of premium-seat auctions is expected to grow as more fans seek out the perks that typically come with such seats, such as special food and drink services. Despite initial customer frustration with high costs, the Giants' PSL sales are brisk. Just 10 of the 1,800 fans who control the 4,500 seats carrying $20,000 license fees decided to give up their tickets. Nearly 65% of the Giants fans who hold tickets behind the home bench that will cost $700 per game signed on to keep their seats. |
| 12 | 7941 | 2006 | The New York Jets are joining with eBay to auction off licenses to 2,000 of the best seats in the stadium the team will share with the Giants, a new approach that will test the limits of what football fans will pay for top-of-the-line seats. The Jets expect the licenses to go for more than $25,000 each, the price the team will charge for licenses to less-desirable seats behind the visiting team's bench. Personal seat licenses (PSLs) give fans the right to buy season tickets for a certain seat for the life of a stadium. The fan owns the license and can sell or transfer it, though the secondary market for PSLs has been mixed. The popularity of premium-seat auctions is expected to grow as more fans seek out the perks that typically come with such seats, such as special food and drink services. |
| 13 | 8200 | 2009 | Museums have taken steps towards variable pricing—changing the price according to demand. Many museums charge extra for special exhibitions. The Los Angeles County Museum of Art has a pattern of charging more on weekends dating at least to its blockbuster 1999 exhibit, "Van Gogh's Van Gogh's," which cost $20 on weekends and $17.50 on weekdays. |
| 14 | 8221 | 1996 | College and universities ramped up tuition for this academic year by almost double the rate of inflation. Four years of room, board and tuition at a decent private liberal arts college now costs about $100,000. There have been 15 years of sharply rising tuition costs. At public four-year colleges and universities, tuition rose 256% from1980 to 1996, despite the fact that the CPI logged only a 79% increase during the same period. |
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