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margin around the account from the beginning," he wrote. "With multiple gin around the account from the beginning," he wrote. "With multiple
t their core product, remove the bells heir core product, remove the bells mar
and w
and whistles and lower the price," histles and lower the price," r revenue sources, you can more easily 'eat' one cost in exchange for revenue evenue sources, you can more easily 'eat' one cost in exchange for revenue
wrote Ailawadi and Farris. "Call that
on another."
wrote Ailawadi and Farris. "Call that on another."
the 'good' version. Then they might
the 'good' version. Then they might
Overnight changes to pricing models such as monthly price increases of $25 or
add a pricier 'better' version that has Overnight changes to pricing models such as monthly price increases of $25 or
add a pricier 'better' version that has
extras and a 'best' option fully loaded $
extras and a 'best' option fully loaded
$35 per merchant can sometimes backfire, as Klinckphilip has seen at several 35 per merchant can sometimes backfire, as Klinckphilip has seen at several
with features at an even higher price."
with features at an even higher price." I ISOs. He wrote, "The increases I have always had issues with, and immediately, SOs. He wrote, "The increases I have always had issues with, and immediately,
were when the ISO decided to charge a $25 fee this month for whatever; or e when the ISO decided to charge a $25 fee this month for whatever; or
wer
5. Super-size bundles
5. Super-size bundles for for added a monthly minimum in for everyone; or $9.99 IRS fee; or $229 annual hly minimum in for everyone; or $9.99 IRS fee; or $229 annual
added a mont
a tota
a total experiencel experience P
PCI fee plus monthly PCI noncompliance fees; etc.CI fee plus monthly PCI noncompliance fees; etc.
Naturally, we've all gradually accu-aturally, we've all gradually accu-
N "Five bps [basis points] here or 1 cent there. No one notices too much until three Five bps [basis points] here or 1 cent there. No one notices too much until three
"
mulated our own internalized pric-lated our own internalized pric- or four
mu
or four years later when an agent comes in and says they can save them 20 to years later when an agent comes in and says they can save them 20 to
i ing models for what we have come ng models for what we have come 30 bps, w
30 bps, which is probably the amount of the increases over the years."hich is probably the amount of the increases over the years."
to expect certain things to cost. hings to cost.
to expect certain t
Ailawadi and Farris call this our "ref-his our "ref-
Ailawadi and Farris call t Kud
Kudos to TPSS//TIGER for reminding us that after all is said and done, ours is os to TPSS//TIGER for reminding us that after all is said and done, ours isR
erence price." rence price."
e
still a service business. "The key is to listen to the merchant, and they will tell he key is to listen to the merchant, and they will tell
still a service business. "T
you how to proceed," he wrote. He added that whether you're using a push ou how to proceed," he wrote. He added that whether you're using a push
y
"[Consumers] judge the value of mower or a riding mower, you still have to cut the grass every week, so roll up
"[Consumers] judge the value of
mower or a riding mower, you still have to cut the grass every week, so roll up
a product based on the difference
a product based on the difference your sleeves and adapt to whatever changes are occurring.
your sleeves and adapt to whatever changes are occurring.
between what is being charged and
between what is being charged and
Dale S. Laszig is a writer and payments industry executive specializing in business payments industry executive specializing in business
the reference price in their head,"
the reference price in their head," Dale S. Laszig is a writer and
development and sales performance improvement. She manages channel sales at Castles
they wrote. "One way to boost that
they wrote. "One way to boost that development and sales performance improvement. She manages channel sales at Castles
reference price: put together a pack-
reference price: put together a pack- Technology and sales effectiveness programs through IMPAX Corp. and C3ET Credit
Technology and sales effectiveness programs through IMPAX Corp. and C3ET Credit
age of goods.
age of goods. Card Consortia for Education & Training Inc. She can be reached at 973-930-0331 or
Card Consortia for Education & Training Inc. She can be reached at 973-930-0331 or
dale_laszig@castechusa.com.
dale_laszig@castechusa.com.
"Let's say a company makes skin-
"Let's say a company makes skin-
care and beauty products. It can put
care and beauty products. It can put
a bunch of those items into the same
a bunch of those items into the same
box, call it a 'home spa package' and
box, call it a 'home spa package' and
sell it at a premium. The idea is to get
sell it at a premium. The idea is to get
customers to compare the price to a
customers to compare the price to a
day at a spa – the reference price for
day at a spa – the reference price for
the product goes up, in comparison
the product goes up, in comparison
to which the package is a much bet-
to which the package is a much bet-
ter deal."
ter deal."
Many integrated POS systems
Many integrated POS systems
marketed today have taken this
marketed today have taken this
approach, positioned as an inventory-
approach, positioned as an inventory-
management-in-a-box to small busi-
management-in-a-box to small busi-
ness owners, with a payment compo-
ness owners, with a payment compo-
nent embedded in a comprehensive
nent embedded in a comprehensive
package.
package.
6. T
6. Take incremental steps, ake incremental steps,
not giant leaps
not giant leaps
T
The key to crafting any pricing strat-he key to crafting any pricing strat-
egy is to create a flexible, scalable
egy is to create a flexible, scalable
model t
model that systematically reviews hat systematically reviews
and revises pricing over time to main-evises pricing over time to main-
and r
tain equilibrium across an enterprise.
tain equilibrium across an enterprise.
Mbruno recommended taking a bruno recommended taking a
M
defensive stance in the beginning
defensive stance in the beginning
of a new merchant relationship to chant relationship to
of a new mer
protect margins and leave room for rotect margins and leave room for
p
price increases. "[Another] method
price increases. "[Another] method
to handle price increases is to spread handle price increases is to spread
to
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