Or they price discriminate, by selling the wool sweater at a high markup to customers who self identify as especially interested in handmade wool sweaters while advertising the cheaper acrylic sweater to everyone else.
We offer a service which we charge $10 for. When we first started offering the service we didn't really commit to a time period for completion but generally did it as fast as possible, perhaps it took maybe 4 to 8 hours but sometimes it might be done in an hour or two.
We then changed the pricing as follows:
12 to 24 hours service ($10)
8 to 12 hours service $12
2 to 8 hour service $15
Many people pay the extra fee happily. Instant revenue.
We have something else which is higher priced, say $120. We offer expedited service on that as well charging $25 for "rush". Same thing. Many people choose to pay the rush fee for the better service.
I guess the only thing that is really different from what we do with this and what Fedex does is the fact that it doesn't cost us anymore to offer the service faster at all. We are just allowing people to self identify and feel better by having some kind of guarantee. (Although we don't really guarantee anything we just guarantee we will attempt to get it done faster if we don't they pay at the rate that they would have paid for the "default" service.
(Disclaimer: Figures approximate but accurate enough for the point I am making).
We offer a service which we charge $10 for. When we first started offering the service we didn't really commit to a time period for completion but generally did it as fast as possible, perhaps it took maybe 4 to 8 hours but sometimes it might be done in an hour or two.
We then changed the pricing as follows:
12 to 24 hours service ($10) 8 to 12 hours service $12 2 to 8 hour service $15
Many people pay the extra fee happily. Instant revenue.
We have something else which is higher priced, say $120. We offer expedited service on that as well charging $25 for "rush". Same thing. Many people choose to pay the rush fee for the better service.
I guess the only thing that is really different from what we do with this and what Fedex does is the fact that it doesn't cost us anymore to offer the service faster at all. We are just allowing people to self identify and feel better by having some kind of guarantee. (Although we don't really guarantee anything we just guarantee we will attempt to get it done faster if we don't they pay at the rate that they would have paid for the "default" service.
(Disclaimer: Figures approximate but accurate enough for the point I am making).