How can SweepSouth balance increasing booking fees to boost revenue against potentially losing price-sensitive customers?

Introduction

Balancing increased booking fees against potential customer loss is a critical trade-off for SweepSouth. This scenario involves weighing short-term revenue gains against long-term customer retention and market share. I'll analyze this trade-off by examining the business context, user impact, and potential outcomes, ultimately providing a data-driven recommendation.

Step 1

Clarifying Questions (3 minutes)

• Business Context: I'm thinking SweepSouth's current revenue model relies heavily on booking fees. Could you share how significant these fees are to our overall revenue mix?

Why it matters: Helps quantify the potential impact of fee changes Expected answer: Booking fees contribute 60-70% of revenue Impact on approach: Higher percentage would justify more careful experimentation

• User Impact: Based on our user segments, I assume price sensitivity varies. Can you provide insights into our most price-sensitive user groups?

Why it matters: Identifies segments at highest risk of churn Expected answer: Budget-conscious users in specific geographic areas Impact on approach: Would focus on targeted pricing strategies for these segments

• Technical Feasibility: I'm considering the complexity of implementing variable pricing. How flexible is our current pricing system?

Why it matters: Determines the feasibility of sophisticated pricing strategies Expected answer: Moderately flexible, but requires development effort Impact on approach: Would influence timeline and resource allocation for implementation

• Resource Allocation: Thinking about our team capacity, how much bandwidth do we have for a pricing overhaul?

Why it matters: Ensures alignment with current team priorities and capabilities Expected answer: Limited bandwidth due to other ongoing projects Impact on approach: Might necessitate a phased approach or reprioritization

• Timeline Pressure: I'm curious about the urgency of this decision. Are we facing immediate competitive pressures or financial targets?

Why it matters: Helps balance short-term needs with long-term strategy Expected answer: Moderate pressure due to upcoming quarterly targets Impact on approach: Would influence the aggressiveness of the pricing strategy and testing timeline