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OPERATIONS

Holding Back on Price Hikes

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In today's tough business environment, imposing an outright price increase can put an account in jeopardy. However, there are other ways to adjust your cost-price ratio when profit margins shrink. Ask customers to absorb charges for ancillary services associated with your company's product or service. Jim Roberts, owner of $6.7-million American Express Regency Travel and Cruise, in Ontario, Calif., got good results when he tried it. He asked his 50 core corporate customers to pick up the tab for overnight mail and other deliveries. It was either that, he explained, or charge delivery fees for each transaction. Surprisingly, only two clients refused to help out. Many even offered their own overnight-delivery account numbers. The result: Roberts's delivery costs dropped from more than $300 a month to $50.

Copyright 1998 G+J USA Publishing




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