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Stop on a Dime

Pick the right price point to pull in profits.
January 1, 2006
URL: http://www.entrepreneur.com/article/81662

Forget about searching for that one perfect price for your product. Instead, says pricing expert Rafi Mohammed in The Art of Pricing (Crown Business, $25), aim to find approximately right prices for several of your major customer groups. Offer discounts to some; charge premiums to others. Bundle to create high-priced packages for those who value them; use bare-bones bargains to attract new customers. Urge employees to sell higher-profit items, and limit their ability to give price breaks.

If you've been consumed by cost control, consider thinking about pricing instead. Moham-med cites a cross-industry study where raising average prices by 1 percent meant 11 percent higher profits, while a 10 percent average price hike increased profits 100 percent. This conversational, easy and informative read is worth paying attention to.

Get Out the Magnifying Glass
When one window in a building gets broken and stays that way, soon all the windows will be broken. That's the idea behind Broken Windows, Broken Business (Warner Business Books, $21.95) by PR executive Michael Levine. Levine warns that every detail is critical. As a warning, he points to Kmart, which alienated once-loyal shoppers with poor goods and only moderately low prices. On the other hand, pampering passengers with leather seats and personal TVs has helped JetBlue soar. Is it the end of the big idea? Not quite, but the little things count, too.

Good Reads
Check out these titles on the "Best Bets From Entrepreneur" shelf at Borders.

Launch It! How to Turn Good Ideas Into Great Products That Sell
by Molly Miller-Davidson, JoAnne Stone-Geier and Michael B. Levinson, $21.95

Topgrading: How Leading Companies Win by Hiring, Coaching and Keeping the Best People
by Bradford D. Smart, $29.95

Copy This! Lessons From a Hyperactive Dyslexic Who Turned a Bright Idea Into One of America's Best Companies
by Paul Orfalea and Ann Marsh, $25.95

Megatrends 2010: The Rise of Conscious Capitalism
by Patricia Aburdene, $24.95

Mark Henricks is Entrepreneur's "Staff Smarts" columnist.