The 1% Windfall

The 1% Windfall wasn't at all what I expected from a book on pricing.

Like Priceless, Rafi Mohammed's book was something I learned about by reading Todd Sattersten's Fixed to Flexible. Yet while I found Priceless a pleasant surprise precisely because it was much more than a book about its titular subject, The 1% Windfall disappoints for exactly the opposite reason: it doesn't delve deep enough into the subject of price and value.

The book derives its title from a simple point: that if a company were to increase a product's selling price by only one percent, holding demand constant the said price increase translates to a one percent windfall that goes directly to the bottom line. Of course, companies cannot rely solely on price increases to generate revenues and profits, which Mohammed readily acknowledges. Nonetheless, the straightforward math makes a compelling case for why companies should give more importance to price as a crucial component of business strategy.

Thus, The 1% Windfall positions itself as an aid for corporate decision-makers to develop better pricing strategies; at least, such is my impression. In this regard, much of the book is dedicated to outlining a variety of pricing strategies -- namely, pick-a-plan, versioning, and differential pricing -- and examining actual companies that have implemented these successfully. But its main draw is in its third act, where Mohammed outlines how all of these figure in what he calls a "pricing blossom strategy" that can be used profitably by any company whether in good times or bad.

However, I would argue that there is nothing particularly new or compelling that The 1% Windfall has to offer that readers may not already know. The pricing strategies that are surveyed throughout are easily familiar to the average consumer and certainly old hat to professionals who make pricing (particularly promotional pricing) decisions for their businesses. Because the examples cited throughout the book are brief by design, they convey the "what" of some companies' pricing strategies, but lack the detail necessary to delve deeper into the more important "how" or "why". As for the book's much touted "pricing blossom strategy", I couldn't help but feel it simply amounted to "some combination of all the above-mentioned pricing strategies" and was thereby neither particularly illuminating nor helpful.

This is not to say that Mohammed doesn't know what he's talking about. As a respected consultant on pricing, he certainly has the qualifications to speak cogently on the subject. Rather, I would surmise that The 1% Windfall represents the end product of much thinking about price strategy, when in fact it is the process of such analysis that anyone interested in the topic is after. As a consequence, The 1% Windfall falls short of being a blueprint for "How Successful Companies Use Price to Profit and Grow" (as its subtitle suggests). Indeed, I would say the book would fit quite well if it were supplementary material for an undergraduate business course; but it's a far cry from must-read material for high-powered executives.

It wouldn't surprise me if Mohammed's earlier book, The Art of Pricing, did in fact provide more of the specifics I felt was missing from The 1% Windfall. But I'm afraid that after reading the latter I'm not yet prepared to pay the price of admission just to find out.