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Cost Cutting And Profit Increase Using Menu Pricing

Changing pricing can help cut costs or rather improve your bottom-line. To see how this works you will need to visualise a spectrum of possible pricing strategies. At one end is ‘bundled pricing solutions’, selling to their customers for a given total price which comprises many elements. At the other end of the scale is ‘unbundled menu pricing’, where customers get to see the price of individual components and cherry pick the bits they want.

Bundled solutions help customers when, what they are buying is complex and risky or in an early stage of development and so not yet understood. Customers are more concerned about the ease of use and reliability than about cost.

However as markets mature, customers understand better what they are buying and will take on more risk. At that stage menu pricing can help both sellers and buyers reduce costs.

The airline industry has moved to menu pricing. When buying a ticket there are two cost options on the same airline. The high cost menu options could more than double the cost of a given trip. However introducing menu pricing the airline and its customers are set up to achieve a win-win situation. If a customer eliminates the airlines cost of agency commissions, credit card fees, paper tickets and call centres, they get tangible benefits in reduced cost . Customers can choose which airport to travel from and pay different airport charges as well as deciding how much luggage to take. Think of Virgin airlines as an example. They advertise the basic cheap rates with a tiny print saying, conditions apply. Believe me there are loads in their menu which will all cost you lots!

However when businesses decide to provide their customers with menu pricing care needs to be taken that customers are not fooled. Some car rental companies often exploit menu pricing. Whilst they provide a great prepaid rate for a day’s use which will include the usual charges for mileage, insurance and local taxes the final bill can often cost you up to a double. Creative car rental companies can come up with airport surcharges, franchise fees, exchange-rate charges, insurance against excess charges on the normal insurance and so on.

Another example well known where customers are fooled is with bank charges and fees.

Check your telephone bills for loads of surprises, in most instances anyways!

About the Author

Skanda Kumarasingam was senior manager and professional primarily in general management and management accounting roles either with profit centre responsibility or in supporting senior managers with profit responsibilities. He has held management roles in KPMG (Audit and Consulting), Coke (Regional Internal Auditor and Leader- Financial Impact Teams in the Asian Region), PepsiCo, Marks and Spenser (UK) , Gap(Singapore), Next (Singapore) and Ernst and Young (Business Training Centre- Kingdom of Bahrain). Skanda has over 15 years experience in senior management and professional business training roles. His models which include the Profit Maps (for profit improvement and cost reduction) has been widely used in many organizations saving them large amounts of dollars in costs and dramatically improving profits. Go to www.profitmaps.com.au to see more of his powerful ideas

How do you get the HTML for surrounding MENU’S WITH LINES HELP?

Okay check out the site below and you will notice she has little lines around like finding your solution and then links under that. How do you get that and how do you get the little highlighted boxes that she does with the link underneath?

http://www.debtsteps.com/

You need to learn css badly.

http://www.yourhtmlsource.com/stylesheets/

Your css would look something like:

.menutitle {background-color: #******; border: #****** 1px solid; font-style: bolder; }

the html:

title

To understand how to implement this, use the link above and read through/print off all the tutorials.