Offer Price Incentives for Customers to Help You Lower Costs
Prices can raise profits by helping encourage customers to ask for things that are very expensive to deliver. This article looks at two examples of creating lower costs and higher profits by using this technique.
With increased global competition, the customer is more in charge than ever. That doesn’t mean that you need to offer services that cost you a fortune: Better designed pricing can be a great help.
Let’s consider an industrial example. A building materials manufacturer studied its customers in terms of how the mix of products they ordered affected profits.
In Adding Value to Your Business Model, One Thing Should Lead to Another
Focus on finding value improvements that open the doors to further value improvements, and your business model will improve its profitability in exponential ways.
As you consider the type of value you want to add to your business model, you should also examine the longer-term consequences. Otherwise, you may create short-term solutions that offer limited benefits.
For example, adding new variations on a fad toy, like a hula hoop, will extend its life. Yet, at some point, the fad will be over no matter what you do. The rewards of offering those variations will not continue to expand into the future.
In Adding Value to Your Business Model, One Thing Should Lead to Another
Focus on finding value improvements that open the doors to further value improvements, and your business model will improve its profitability in exponential ways.
As you consider the type of value you want to add to your business model, you should also examine the longer-term consequences. Otherwise, you may create short-term solutions that offer limited benefits.
For example, adding new variations on a fad toy, like a hula hoop, will extend its life. Yet, at some point, the fad will be over no matter what you do. The rewards of offering those variations will not continue to expand into the future.