Business 101: Restrictions to Increase Revenue

Published on Feb 8, 2011   //  Business Topics

When you are in business, it only makes sense to pay attention to the bottom line. It only makes sense to devise strategies that would help you increase your revenue, but some of these strategies may not be well-received by the general public.

One of the more prominent examples would come in the mobile phone market. You’ll find that a large number of phones sold through traditional carriers do not allow for custom ringtones. By locking out the ability to upload and activate their own ringers, the carriers are “encouraging” customers to purchase the premium ringtones from them instead.

Similarly, you’ll find that certain sought after devices can only be purchased (on subsidy) if the customer agrees to a contract of a minimum length with a minimum monthly fee. In the case of the iPhone 4, it appears to be common practice not to sell the subsidized device without a monthly service plan of $50 or more.

This helps to increase revenue (ARPU) for the carriers, but it can leave a bitter taste in the mouths of many customers. For this reason, it’s important to find the delicate balance between these two goals.

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