Ask Business Dog- The Airline Business Model

by smiley ~ July 9th, 2008. Filed under: Advice, Business Dog, Uncategorized.

Business Dog

I would like to introduce my friend Business Dog.  Business Dog has all the experience one will ever need in the dog-eat-dog world of business and he has been kind enough to agree to answer some business questions from our smileyfootcom readers.

Jim Klienbauser owner of a small coffee and gift shop asks:

I am having trouble keeping my prices low in this period of rampant inflation, how much of my business do I stand to loose if I increase my prices 10% before my competitors do?

Business Dog’s answer:

Ok Jim, I read your pain.  I think you are looking at this all wrong, you need to raise your prices 50% and cut back on service and amenities, let’s call it the “Modern Airline Business Model”.

The easiest part is to go around your place of business and change all of the price tags to the new higher price.  Customers will be thrilled because studies proove people have formed a mental tie between higher price and higher quality.

The harder part is to also get rid of the service and amenities.  First get rid of all the frills you mistakenly believe your customers want and charge for them.  Say for instance you have a restaurant and a customer orders a soup and salad.  The soup should be served in a ziplock bag, but the salad can still be served in a bowl.

When the customer gets the soup and salad she will make a statement such as “Um, waiter I need a fork and spoon”.

You will respond “Sure, we are having a special on spoons today they are only $9.95, but forks are still regular price at $12.95.  Can I get you one of each?

Your costumer will then say “Well, I gess I need those items to make eating this easier, but what’s going on with the soup in the bag?”

This is when you lay a big promotion idea on the customer  and say “The soup in a bag is a new earth friendly, green promotion we are implemeneting.  If you would like to be more environmently friendly we can upgrade you to a 1st class bowl for only $5.00.”

The customer will be happy to pay because customers love paying extra for things they are used to getting for free.

Don’t worry about your competition because as soon as they see the giant increase in business they will be crawling over each other to copy your business model.

If you have business related questions for Business Dog send them to businessdog@smileyfoot.com

1 Response to Ask Business Dog- The Airline Business Model

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