Raise Price to Improve Revenues and Margins
CHOICE 1 OBJECTIVE: RAISE PRICE, RAISE PERFORMANCE AND COST BY SMALLER AMOUNT
CHOICE 2 ISOLATE SEGMENTS: CUSTOMER SEGMENTS WITH HIGH SERVICING COSTS
CHOICE 3 COMPONENT: SET OR RAISE MINIMUM PURCHASE REQUIREMENTS
| No. | SIC | Year | Notes |
| 1 | 6211 | 2004 | Charles Schwab Corporation reduced commissions in an effort to lure entry-level clients tempted by online firms. Charles Schwab & Co warned that lower commissions would trim revenue by 2% or 3% in the next year. Commissions were cut by more than 60% for its wealthiest clients. Customers with over $100,000 in stock or other assets will pay $19.95 for each trade, and customers with more than $1 million in their accounts will pay only $9.95, both commission fees down from $29.95. Still, Schwab's prices will be more expensive than their competitors. E-Trade charges $12.99 per trade for clients with accounts worth at least $50,000, and Ameritrade charges $10.99. However, Schwab says that it's not looking to be the least expensive, but win back customers with its combination of service, reputation, and cost. In the meantime, Schwab is compensating for any lost income by scaling back hiring. |
| 2 | 6211 | 2004 | Schwab was already offering the $9.95 rate to active traders using its CT trading platform. Schwab is also cutting the fee for making an automated trade by phone to $29.95 per trade for up to 1,000 shares, plus 3 cents for each additional share. The current commission is 3 cents per share, with an overriding minimum of $49.95 |
| 3 | 7374 | 2001 | Users of the new money-transfer programs like PayPal and Checkfree should be cautious and selective when looking at new services. They should look at the security of the system, contact information in case of problem and compare fees between online services. PayPal is free to the buyer but merchants pay a transaction fee of 2% plus 30 cents per transaction. Billpoint only works with eBay auction items and has no fee for buyers but charges 35 cents for items under $15 and 1.75% for larger amounts. PayDirect will cost 30 cents per payment plus 2.5% of the transaction amount and is limited to Yahoo auctions. Western Union's BidPay targets the online auction market and requires customers to pay $5 for a money order of up to $100 and $5 plus 2.25% of the order's face value for larger orders. |
| 4 | 7514 | 2008 | Hoping to keep wallet-conscious road trippers behind the wheel, car-rental agencies are offering a series of gas discounts that allow customers to snag a tank for well below the national average of $3.94 a gallon. Many of the major car-rental agencies offer discounts of as much as 25 cents per gallon to renters who opt to prepay for half or a full tank of gas when they pick up their car. The catch is that there is no refund for leftover fuel, so rental agencies bank on you returning the car with at least some fuel in the tank. Also, if you don't prepay you will not only get hit with higher gas prices but also a convenience surcharge that can double the per-gallon price. |
| 5 | 8721 | 1989 | Paychex had a minimum charge of $5 per pay period with the total fee directly proportional to the number of employees. If a company would have 17 employees the cost to prepare pay checks, tax returns and accounting records is $23 per pay period, less than $1.50 per employee. This saved the small business customers a good deal of effort and time. The problem this creates, though, is that with such low prices, Paychex needs big volume to make real money. |
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