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 WITH HIGH SERVICING COSTS
CHOICE 3 COMPONENT: ELIMINATE FORMS OF DISCOUNT
| No. | SIC | Year | Notes |
| 1 | 2834 | 1995 | Drug companies are offering deeper discounts to the powerful health plans that do manage drug costs and usage aggressively. They are eliminating discounts for plans that haven't helped them or are too small. |
| 2 | 3711 | 2008 | Chrysler LLC's finance arm last week decided to get out of the auto-lease business. Now, General Motors Corp and Ford Motor Co. are signaling that they're paring leasing at their captive finance companies. This means that loyal lease customers looking to stay in a new car will increasingly have to consider buying, which in many cases will involve a higher monthly payment. But automakers are trying to make these payments as attractive as possible. Chrysler hopes to make payments on 72-month loans for purchasing a new vehicle the same as those on previous 36-month leases. Ford hopes to raise prices on leases so high that consumers will balk and be forced to consider buying. Currently, leases make up 20% of total new vehicle sales. Toyota Motor Corp. and Honda Motor Co. offer customers a leasing opportunity, as they haven't made any changes to their leasing businesses (because they have avoided relying heavily on sales of fuel-thirsty pickup trucks and SUVs). |
| 3 | 3713 | Paccar does charge slightly more than the competition, but its price premiums depend on the type of customer served. Manufacturers stack customers in four basic groups, or quartilies. In the highest quartile there are high-volume customers whereas in the lowest quartile there are low-volume customers. Paccar charges about a 1% premium on products sold to customers in the first quartile but as much as 5% premium on customers in the lowest quartile. | |
| 4 | 4953 | 1996 | The average tipping fee paid by garbage collectors has trippled over a 6 yr period due to to rising land prices and new EPA regulations. Municipal and private firms are responding w/ volume based pricing programs. |
| 5 | 6300 | 2004 | The Council of Insurance Agents and Brokers issued a report on the third quarter of 2004 that indicates how variable pricing is in the market. Two-thirds of all large and medium accounts experienced drops of up to 20%. An additional 11% of large accounts saw premiums fall 20 to 30%. In the same survey, premiums for 25% of small accounts remained unchanged while 34% dropped 1 to 10% and 11% declined 10 to 20% from the previous quarter. The average premium for commercial accounts declined 5.9% in the third quarter. Large accounts dropped by 8.3%, medium by 6.4% and small accounts by 3.1%. Price competition has returned to the market, though apparently more for new business than for renewal business. |
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