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Stop on a Dime

Pick the right price point to pull in profits.

This story appears in the January 2006 issue of Entrepreneur. Subscribe »

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.

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