A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game.
With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake,” a plethora of interesting word choices exist which all describe the same thing – keeping a little bit of the revenue for the company that is running the service.
J.C. Penney: Ditch the Risky Pricing Strategy - Rafi Mohammed. By Rafi Mohammed | 10:34 AM May 21, 2012 While I was dubious about J.C.
Penney’s switch to its Fair and Square Everyday Low Pricing Strategy, even I have been surprised at how miserably the strategy is faring so far. During its first quarter under the new pricing strategy, same store sales dropped by 18.9%, store visits decreased by 10%, and the average spend was down by 5%. As a result, the retailer lost $163 million (compared to earning $64 million in the first quarter of 2011) and suspended its quarterly dividend. Understanding J.C. Penney's Risky New Pricing Strategy - Rafi Mohammed. By Rafi Mohammed | 12:01 PM January 30, 2012 J.C.
Penney CEO Ron Johnson recently unveiled ambitious plans to transform the 110-year-old department store chain into a 21st century retail powerhouse. Leveraging his experience at Target and Apple, Johnson aims to create 80 to 100 highly-branded “stores within a store” (e.g. a Martha Stewart boutique). With Ron Johnson Out, What Should J.C. Penney Do Now? - Rafi Mohammed. By Rafi Mohammed | 1:29 PM April 9, 2013 J.C.
Penney and its CEO Ron Johnson have parted ways. The news wasn’t terribly surprising as 2012 had been a challenging year: sales were down by $4.3B, the company lost close to $1B, and its stock price dropped by more than 50%. Despite Johnson’s and his supporters’ pleas of “give us more time,” Penney’s board finally succumbed and exhaled, “No mas.” In a “meet the new boss, same as the old boss” moment, Penney announced that its previous CEO, Myron E. What led to Mr. Pricing experiments you might not know, but can learn from. Lots of entrepreneurs struggle with pricing.
How much to charge? It’s clear that the right price can make all the difference – too low and you miss out on profit; too high and you miss out on sales. Don’t ask, can’t tell Asking people what they’d pay for and how much rarely works. [Tweet It!] For one thing people will tell you what they WANT to pay—which is obviously much less than what your product or service is actually WORTH. When it comes to money, people are unable to predict accurately whether they’d pay or not. The High Cost And Extreme Stickiness Of Free Stuff. When I first began shaving at the tender young age of 16, I chose a Gillette razor.
It seemed far cooler than my father’s buzzing electric shaver. Besides, the razor was dirt cheap and, even better, the blades in the package were "free. " Twenty years later, I’m still shaving with a Gillette razor, although I estimate I’ve spent roughly $11,500 dollars on blades so far in my life. (The razors/razor blades marketing strategy is, of course, legendary. See also: printers, ink.) Costs aside, whenever I find myself talking price-setting strategies with despairing executives, Gillette’s approach remains relevant. Our pricing decisions are based on … Starbucks Raising Prices « Iterative Path. Image via Wikipedia Two years back we saw the story of Starbucks price increase.
Despite widespread criticism in the news media we saw no real ill effect on its sales or brand. You know why from here (elasticity) and here (demand curve shifts). Now they are rolling out price increases to the rest of the country. I want to point out some key points noted in the price increase story that serve to tell us how well they are executing this change. Here is the link to Reuters story if you want to read it without my interpretations. Starbucks Corp (SBUX.O) raised prices by an average of about 1 percent in the U.S. Average price increase is meaningless. Starbucks expects high costs for things like coffee, milk and fuel to cut into profits this year.
They are giving reason for the price increase. What Pricing Model Is Most Effective for Your Business? Image from Shutterstock Determining the most appropriate pricing model for your business is tricky and takes considerable research, planning and testing before full implementation across all of your products and services.
Of particular concern to many business owners is the impact of price model changes on the customer and their standing among the competition. When determining how to best price your products and services, consider: The current positioning of your products and services. Are they positioned as low-cost options, luxury offerings, or somewhere in the middle?