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Perfect Match

Boost profits by matching the right customer with the right price.

If a dentist asks Peter Chwalisz to handle his tax return, he'll get a referral to another accountant, while a doctor asking the same question will get an appointment. If you want Chwalisz, president and co-owner of a 10-person Mississauga, Ontario, accounting firm, to do your taxes after April 30, you'll get a nice discount compared to people who want to file earlier.

What may sound whimsical is actually sound business practice, says Chwalisz, a student of an emerging discipline called revenue management. He's found he makes money on doctors' returns but loses on dentists'. And he cuts prices May 1 because it's the day after the Canadian tax filing deadline.

"You have to charge more when there's bigger demand, but if someone wants to save money, he can," Chwalisz says of his deadline-tied pricing scheme. And on the subject of turning down certain clients, he explains, "You don't do the jobs that are not profitable, period."

Revenue management, or RM, ensures you sell the right product to the right customer at the right price to maximize profitability, according to Bob Cross, an Atlanta RM consultant and author of Revenue Management (Broadway Books). RM can help almost any business succeed and may be essential to survival in some cases, he says.

"There are a lot of things you can do to differentiate your company, but all of them can be matched or surpassed by your competitors," says Cross. "But one of them will make you an invincible competitor, and that's having a strong revenue stream. There's nothing like a huge revenue stream to wash away a lot of problems."

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This article was originally published in the June 1997 print edition of Entrepreneur with the headline: Perfect Match.

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