Book Review - The 1% Windfall: How Successful Companies Use Price to Profit and Grow

The Ultimate List of Great Books on Pricing 

Individual Book Review:

The 1% Windfall: How Successful Companies Use Price to Profit and Grow

Book Author: Rafi Mohammed (2010)

Foremost pricing expert Rafi Mohammed shows businesses how to pick up a financial windfall and stimulate growth using the often-neglected strategy of setting prices. This book shows how moderate cumulative changes to an everyday business process- pricing- can yield important rewards.

The 1% Windfall is one of the books selected from The Ultimate List of Great Books on Pricing we have compiled. Pick up a book or two - to help you charge the right price for your products or services. 

Continue reading through our review for The 1% Windfall below!

The 1 % Windfall is Rafi Mohammed´s follow up book to “The Art of Pricing”. The book can help small businesses make more money and reach a larger number of consumers by showing us how there’s a different pricing strategy for every business problem or challenge.

The concept behind this book is that just a 1% increase in price leads to a 11% increase in operating profit! This is exemplified through practical case studies and fun stories to read. Finally, Rafi gives clear instructions on how to implement this ´Culture of Profit´ into your own business.

The author´s key idea behind this book is that there is always an optimal strategy for the business or market challenge you´re facing that will help you get the most profit out of your products or services. Therefore, you must plan for different possible market scenarios to keep growing even in the worst of times.

The different key strategies taught by Rafi in the 1% Windfall can be summarized by the following:

• One-On-One Pricing strategy.

This strategy describes that when selling a price to a consumer it is optimal to use a value-based approach. Using the target customer’s next best alternative as a reference and adding or subtracting cost depending on your business attributes, you can determine your products value.

• Multi-customer Pricing strategy

Businesses that sell on a larger scale have to set strategies that target a larger customer base. A demand curve should be drawn from individual consumer willingness to pay for your product , depending on the values derived from the one-on-one pricing methodology.

• Specialized Pricing Plans to drive sales.

You must fluctuate prices depending on the customer. For example, by offering a lower base price and the offering additional payments for features- to reach low-end consumers.

• Vary your pricing plans to attract both high end and budget conscious customers.

Use differential pricing to earn higher profits from customers willing to pay more, as well as targeting lower end budgets.

• Create High-end and Low-end versions of your product to target diverse consumer types.

Offering premium packages or modified versions of your product can attract tons on new customers. Moreover, stripping your product to its basic function can attract price-sensitive consumers.

• Price defensively during recessions and inflation.

Rafi recommends, amongst other concepts, to create a new line of products for times of crisis and therefore meet the demand for lower priced products with basic features. Your original product (expensive model) will continue to be purchased by high-end consumers.

To Sum up!:

The 1% Windfall compiles the fundamental guidelines to price strategies, covering everything concerning how to price optimally to drive profits and avoid ´loss aversion´, whilst targeting different consumers and pricing in different market situations. The first chapters describe how and why value pricing is the best pricing approach, followed by the pricing strategies outlined above and a price implementation tactics section! The book is very technical but very engaging through stories and case studies making it and easy read for all audiences. 

If optimizing your price is one of the challenges faced by your business, you’ll find The 1% Windfall extremely helpful!

Happy reading!

Pricebeam.