| The 1% Windfall: How Successful Companies Use Price to Profit and Grow | 
| Author: Rafi Mohammed
Publisher: HarperBusiness
Category: Book
List Price: $27.99
Buy New: $6.71
as of 9/6/2010 21:10 CDT details
New (36) Used (12) from $6.43
Rating:  10 reviews
Sales Rank: 51,174
Media: Hardcover
Pages: 256
Number Of Items: 1
Shipping Weight (lbs): 0.9
Dimensions (in): 9.4 x 6.1 x 1
ISBN: 0061684325
Dewey Decimal Number: 658.816
EAN: 9780061684326
Publication Date: March 1, 2010
Availability: Usually ships in 1-2 business days
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Product Description
The 1% Windfall reveals how modest incremental changes to an everyday business practice - pricing - can yield significant rewards. Illustrating the power of pricing, a study of the Global 1200 found that if companies raised prices by just 1%, their average operating profits would increase by 11%. Using a 1% increase in price, some companies would see even more growth in percentage of profit: Sears, 155%; McKesson, 100%, Tyson, 81%, Land O'Lakes, 58%, Whirlpool, 35%. The good news is that better pricing is more than simply raising prices. Instead, the key is to offer customers a variety of pricing options. This strategy is win-win: profits to companies and choices for consumers. But how do executives and managers set the right price? Underpinned by sound empirical research and real-life anecdotes, The 1% Windfall addresses this fundamental question. This book offers guidelines that any company - whether a multi-national conglomerate, small business, or even a non-profit - can follow to create a comprehensive pricing strategy for any product or service. In addition, these techniques and tools provide solutions to avert a slump in a recession, offset the impact of inflation, or battle a new competitor. The result is a mind-opening clear blueprint for companies to price for profit and growth. (edited by author)
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| Customer Reviews:
Showing reviews 1-5 of 10
 Changing Your Pricing August 9, 2010
Kevin Eikenberry (Indianapolis, IN USA)
0 out of 2 found this review helpful
Two comments before I dive into my recommendation. This book was sent to me by a publicist who hoped I'd write about it, and I'm not finished reading it as I write this review.
Additionally, this isn't the type of book I most often recommend here. It is more technical and business focused than most I recommend. I choose to recommend it because it deals with a topic that is a mystery to many in my world and while it may not be a need for all who read this, for those who do have that need, I strongly recommend you read it.
The book is based on two basic premises.
1. The best pricing approach is based on value (and there are a variety of types of value people see in any potential purchase)
2. Changing your pricing upward in even a small way - like 1% - can have a drastic impact on your bottom line.
The author is an economist, and while I took more than one economics class in college, you don't need that background to read it. While this is a serious book, it is written in an accessible and even, while the author shares examples and stories, quite engaging.
After the opening chapter on value pricing, the book has two other major sections -pricing strategy, and more importantly, pricing implementation.
I am finding this book interesting, important and practical - a pretty good trifecta. This is the second book by this author on the topic of pricing. Perhaps my best recommendation is that I plan to buy and read the first one.
Good Overview - July 18, 2010
Loyd E. Eskildson (Phoenix, AZ.)
0 out of 2 found this review helpful
Author Mohammed contends that if the Global 1200 raised prices by 1% (and demand remained constant), average operating profits would increase 11%; similarly, for Sears the improvement would reach 155%, Tyson - 81%, and Whirlpool - 35%. Switching to market capitalization, he contends Wal-Mart would add $37.9 billion. What he doesn't tell readers is that the assumption - demand remained constant, is a major assumption in today's competitive world. (Later in the book he gets to explaining the micro-economic achievement of optimal pricing - a bit more complicated than this.) Nonetheless, his point - that minor revenue increases can have a major bottom-line impact, is important.
Most companies set prices using formulaic mark-ups, or by matching competitors. Parker-Hannifin abandoned its standard markup policy to instead set prices according to how customers valued its products, boosting operating income. Using five categories (1)Core Products - commodities, in a highly competitive market; 2)Some Differentiation; 3)Niche Products with No Exact Competitive Matches; 4)Highly Engineered Solutions; and 5)Specials and Classics - custom designed, or one-of-a kinds), it adjusted prices 1)to market, from -3% to +5%, 2)increased up to 5%, 3)up to 9%, 4)up to 25%, and 5)over 25%. Operating income increased $200 million, and return on invested capital jumped 7% from 2001 to 2006.
The bulk of "The 1% Windfall" consists of other approaches to pricing, some up and some down, aimed at boosting the bottom line. The "Big Three's" employee pricing in 2005 proved popular, though it may simply have transferred sales from later to earlier. Southwest Airlines' "Business Select" guarantees an 'A' pass for an extra $10-$30, and brought in an estimated extra $80 million/year. Other options include off-peak pricing (eg movie matinees), coupons, season-end sales, private-label products, differential pricing (eg. contractors at Home Depot), higher prices for new adapters, club discounts, senior and student discounts, and matching competitors' prices (the latter has the least chance of cannibalization sales at higher prices).
 Finally, someone to help rationalize pricing from a customer-value perspective! June 21, 2010
Grant LeMahieu (Spring Lake,MI)
1 out of 1 found this review helpful
"Challenges the concept of what most firms default to...The good, ol' Cost-Plus methodology.
While Cost-Plus has its merits, author now directs us to refocus on "Value-Based Pricing" and to create "pricing blossoms" that allow us to have inplace strategies for decreased demand, or inflationary situations.
A great resource to keep around because I guarantee that many of your key players are not aware of your pricing strategy and are not able to effectively communicate that in the marketplace!"
Here's a little story I made up to describe the value of this book June 10, 2010
The Happy Artist (Northern New York)
2 out of 2 found this review helpful
I was trying to explain these concepts to my wife, but I can't really explain it as well as Rafi did in his book, so I made up this little story - she got it right away.
Example: A can of Coke; - You are at the beach... You arrive at the beach at 9AM - temperature is 60 degrees, want a Coke? How much will you pay? vs. 2PM, you've been there all day, and it is now 90 degrees. How much is that can of Coke worth now when the kid with the cooler ambles by? (And what if the cans were dented or past the sell-by date - i.e. markdowns?) Actual cost? About 18 cents So, cost (18 cents) is not the issue; value to the customer is. When the kid tells you how much that Coke is, do you think 18 cent cost? Heck no! You wonder if you have enough to buy everyone in the family a soda!
Or, price at a Target ($.31) vs price at a McDonalds ($1.29)... 2 of the bigger companies in America, two very different prices for a 12 oz. Coke - the same product, a 12 oz coke! (OK, so not exactly the same...but good enough for an example OK?)
This book is filled with dozens of strategies and techniques that will help you get away from cost plus pricing and into value based pricing. I'm a retailer, my products generally sell at 2 x cost. But do I have to?
If you run a business you need this book. April 29, 2010
Reg Nordman (Vancouver, BC Canada)
2 out of 3 found this review helpful
Rafi is the guru on pricing as he has been consulting on it for over 20 years. His previous book , The Art of Pricing, was a good book, but this one goes much further into the topic with great examples , worksheets and a step by step plan for a pricing strategy . Did you know that when it comes to pricing there are :
* Four fundamental pricing strategies
* Fifty pricing tactics
* Two offensive pricing blossom (his model) strategies
* Six defensive pricing blossom strategies and
* Thirteen culture-of-profit principles?
This is a very thorough study and it is so clearly written that you can read it like a novel. I could not put this one down. It is the best writing on pricing I have ever come across. if you run a business you need this book.
Showing reviews 1-5 of 10
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