Reduce Price to Improve Revenues and Margins
CHOICE 1 OBJECTIVE: ATTRACT CUSTOMERS
CHOICE 2 SEGMENTS: PRODUCT COST SAVINGS SEGMENT / MANUFACTURING BUSINESS FUNCTIONAL COSTS / MULTIPLE FUNCTIONS
CHOICE 3 COMPONENT: CHANGE FUNCTION AND PRICE TOGETHER
| No. | SIC | Year | Notes |
| 1 | 2452 | 2005 | A new generation of sleek prefabricated houses are suggesting a cost-efficient alternative for design, yet budget, conscious buyer. San Francisco Dwell magazine launched a new line of prefab houses, called Dwell Homes. Whereas regular Bay Area houses can cost as much as $650 per square foot, Dwell Homes average $175-$250 per square foot – about $530,000 for a two-level, 2,500 square foot abode. Buyers of Dwell Homes have three floor plans to choose from, created by architects. |
| 2 | 2731 | 1994 | Encyclopaedia Britannica costs at least $1,500, weighs 118 lbs. and takes 4.5 ft. of shelf. CD versions by competitors are free with a computer or sold separately for $99 to $395, and have moving pictures and music. |
| 3 | 3500 | 2002 | Terex's strategy is based on the idea that customers are more interested in the capability and price of the equipment instead of the innovations. Therefore, Terex produces no-frills machinery and sells it at lower prices than rivals. |
| 4 | 3571 | 1992 | IBM completely revamped its PC offerings, creating four distinct lines aimed at corporations, small businesses, laptop users, and bargain hunters–now covering all price points for all customers. |
| 5 | 3571 | 1996 | NT running on Intel chips is cheaper. An entry-level Sun server costs $7500; an HP NT server using Intel chips goes for $4260. |
| 6 | 3571 | 2002 | Gateway Inc. holds only 5.6% of the U.S. market. To help the company grow, the CEO is making a case to prospective Apple shoppers by marketing Gateway as the cheaper alternative. Gateway's new product is a flat screened Profile 4 which resembles Apple's iMacs but is $400 cheaper. The new Gateway doesn't have enough features to win over Apple loyalists but it could lure some small niche of PC users contemplating buying a Mac. |
| 7 | 3571 | 2003 | Two types of PC buyers are appearing. One is the traditional consumer buying a system just for the home. In that case, price is what counts. Low-end products have driven the PC market. Others are blending work and home functions. They're willing to pay more. |
| 8 | 3571 | 2005 | Many organizations are taking PCs off people's desktops and replacing them with “thin client” systems. Each worker gets a computer screen, keyboard, and mouse. But a central computer room stores all the data and does most of the processing – slashing support costs and making it much easier to track and restrict how workers use their machines. But in general, thin clients' appeal isn't lower purchase costs. Some cost almost as much as desktop PCs. The savings come in managing the desktops. When employees can't slip in virus-laden floppy disks, and the computer professionals can upgrade security protection and add new programs at the touch of a button in the computer room, maintenance costs decline sharply. And the total cost of owner ship drops in turn. |
| 9 | 3612 | 1995 | ABB found that naked solutions enabled it to charge less for power equipment & heavy industrial equipment than for the standard package. This helped it gain the business of companies who then often agreed to trade up by buying optional services. |
| 10 | 3651 | 2005 | Apple Computer Inc. is moving from the high-end and taking clear aim at the low end of its two core markets. Crucially, many of the folks who bought the iPod music player last quarter are Windows users. With iPod mania running full tilt, Apple figures there's an opening to grab PC market share by drawing in users who want Apple's famous style and ease-of-use. Until now, Apple products have been too expensive for most PC users, but Apple's betting that the $499 mini could make Apple a viable contender at the core of the market. To simplify things even further, Apple made sure PC users can plug their existing display, keyboard, and mouse into the unit. It's also betting that once PC users finally get a change to use Apple's highly regarded operating system and software suites, there'll be no turning back. |
| 11 | 3679 | 1996 | Hunt Technologies' new meter reader, the Turtle, costs less than half the price of most competing products. |
| 12 | 6211 | 2004 | ETFs, like those managed by Barclays Global Investors, are hybrid mutual funds which trade all day on exchanges like stocks, unlike the once-a-day pricing of open-end mutual funds. They are designed to track as closely as possible the movement of specific market indexes, with extremely low expenses, translating into higher returns for investors. Financial advisors are increasingly building basic, low-cost core portfolios for clients out of ETFs. The average U.S. diversified-stock fund costs shareholders 0.76% of their investment, ETFs cost 0.29%. |
| 13 | 6321 | 1991 | A handful of companies have persuaded HMOs to charge on a fee-for-service basis, instead of taking the usual pre-paid fee that covers employees even if they do not need medical attention. The companies share the risk of financing medical costs. |
| 14 | 7011 | 1985 | Mid-priced Holiday Inns has introduced a budget product called "Hampton Inns", a high-priced urban hotel called "Holiday Inn Crowne Plaza", and suites-only product, "Embassy Suites". |
| 15 | 7011 | 1992 | By getting rid of frills like meeting rooms, restaurants, and elegant soaps and shampoos, Microtel has been able to cut room rates to an average $28/day vs. competitor's $38. Occupancy is 84%. |
| 16 | 7011 | 2003 | Luxury hotels are dropping their prices and customers now can get a four star hotel for as little as $250 a night. In 2000, seven New York City hotels had average rates of $500 a night, today all seven are averaging $350 a night. To make up for the slack in the prices luxury hotels are piling on surcharges for services rendered. |
| 17 | 8111 | 2004 | Axiom Legal is saving costs by eliminating partners and overhead charges. It has distinguished itself from temp agencies by providing specialized expertise. Clients were harder to come by. The firm burned through $1 million in six months before landing its first blue-chip account – Reuters. Axiom won other accounts, including DoubleClick, Goldman Sachs, and Honeywell. Honeywell liked Axiom because when it had something it could do in-house, but couldn't do it in the time-frame, and someone's on maternity leave, someone's out sick, Axiom could do it. Axiom also has a great price structure compared to law firms, probably close to 50% savings. Goldman liked Axiom lawyers so much that it hired three for its own legal staff. Axiom got conversion fees on those departures. |
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