Reduce Price to Improve Revenues and Margins
CHOICE 1 OBJECTIVE: ATTRACT CUSTOMERS
CHOICE 2 ISOLATE SEGMENTS: PRODUCT SYSTEM COMPONENT SEGMENT
CHOICE 3 COMPONENT: EXTEND A DISCOUNT IN KIND
| No. | SIC | Year | Notes |
| 1 | 7300 | 2009 | Button Worldwide began offering its clients an alternative to its regular billing after a few clients requested that the Palm Beach, Fla., company cut monthly retainers for continuing work—which start around $15,000—by as much as half. Instead of a retainer, Button clients could use a pay-for-performance model where the company earns money only if it secures publicity for a client. |
| 2 | 7311 | 2009 | Business looking to cut costs generally shave their advertising and marketing budgets first. But the ad agency Smith Brothers Agency is actually growing: In 2008, its revenue grew 30%. They credit this growth on charging clients based on the company's performance. This pricing model appeals to customers seeking services with low upfront costs. IWPR adopted a similar strategy: it slashed its monthly retainer to $5,000 from $20,000, opting instead for a percentage of the sales it helps clients ring up. The risk is always on the vendor, so it should establish solid guidelines: sticking to familiar industries and using strict definitions of success. Also, try to control as many variables as possible, by, perhaps, using the vendor's own salespeople. |
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