Pricing as a Solution for Process Improvements?


    A simplification of Pricing your product or service could simplify a lot of your business processes and save you money in the long run! Hard to believe, but I can give you an example from my own recent experiences!

    Recently I was in both New York City and Washington D.C. In both places, I took a lot of the local Subway for my transportation. Both were excellent public transportation systems to get around the city, easily.

    In NY city, I was not frustrated in my using the subway, but in Washington, D.C, I was. I bet that administering business processes in NY city also is easier for their authorities  than it is in Washington D.C.

    All because of how they price their service!

    NY City subway systems price any trip at a flat $2 a trip that gets swiped away from your card or you put in the tokens you get when you enter a station, any of their stations. Once inside, you can travel any number of trains or connections for any distance as long as you don’t exit any of their stations but take connections onward. No remembering where you entered and where you exited!

    In Washington, D.C, trips are priced anywhere from $1.35 to $3.95 depending upon distances travelled on their system. This requires the ticket recording the place you are entering, calculating the price when you exit your destination station and taking it off from the value stored.

    This is where I, as a user of the system got into a lot of hassles. The magnetic stripe got wiped out after I entered a station and the problem was known only at my exit station. Had to go talk to the station agent and get another ticket. The value left over in the ticket could be refunded only by one of their far away stations because that’s where their sales office was! What a hassle!

    I am sure Washington D.C generates the same revenues per average passenger trip (about $2) that NY City does. The DC Metro system could simplify a lot of things for themselves as well as and provide a simpler hassle-free experience for their customer but just moving to a simple flat rate of pricing their service.

    There could be many business process complications coming from a simple act of how you price your product! This is where you can save yourself a lot of hassle, costs, and customer complaints by simply following a simpler pricing strategy!

    Something to think about!

    Almost all quality improvement comes via simplification of design, manufacturing… layout, processes, and procedures. – Tom Peters

    …. and Pricing!


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