Business Model Innovator: Adjust Prices Downward to Increase Sales Profitably
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By :
Donald Mitchell
Submitted:
2009-01-24 11:57:40 Number of Times Read: 16 |
Many business leaders feel stuck when they try to think of a business model innovation. Often, the answer can be as simple as just adjusting prices downward.
How can you make more money with lower prices? Well, if your customers spend enough more money, you'll prosper and they'll love you for it!
Let's take a fun trip to see how this can work. There's an amusement park that I have visited dozens of time since the age of nine. At first, I went a lot because of its unique features. In time, pricing became part of how they brought me back.
Disneyland in Anaheim, California, found that it could greatly increase attendance and profits on days when the park wasn't crowded by offering annual passes at a fixed price.
Tourists might spend a fortune each day to visit while they were in the area. A low-income Californian who lived down the street could come almost every day for little more a year than the tourist spent for a three-day visit.
This was a great deal for families with young children. For the same cost as a walk in the park, the family could take an additional trip to Disneyland after paying the annual fee.
Even if the family only bought some milk while inside, Disneyland's profits were higher than if the family did not attend that day. To the family, it seemed like an amazing bargain: The entry cost per visit could become less than a dollar a day.
What's more, Disney had a chance to expose the family to advertising for its many other offerings. In the Main Street stores and in kiosks throughout the park, Disney merchandise was on sale. Attractions featured tie-ins to ABC television programs (a Disney-owned company), the Disney Channel cable television channel, and promotions for upcoming movies. People were paying to see the advertising more frequently! What a deal for Disney.
Disney liked this approach so much that it built a second amusement park next to Disneyland, California Adventure. This additional park permitted Disney to sell a higher priced annual pass and attract annual pass holders to return even more often.
If one park was jammed on a given day, there was always room at the other park. After the kids outgrew Disneyland's tamer rides, they could give themselves an adrenaline charge on the more daunting attractions at California Adventure. When grandchildren arrived, grandparents could take the youngsters to Disneyland. And the process continues thus through the generations of California's annual pass holders.
What can you do to lower your prices and profitably change behavior to expand consumption of your offerings?
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Author Resource:
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through and receive tips by e-mail through registering for free at
http://www.fastforward400.com
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