The 1% – Gleaning Pricing Tips from Occupy Wall Street

Retrieved from Salon.com

Yes, I am using this post to exploit current political news.

What does Occupy Wall Street (#OWS) have in common with your company’s revenues?

The 1%. (Let’s leave out the obvious macroeconomic effects of #OWS and focus on the metaphorical similarities.)

The absolute fastest way to increase our top line revenue (and our bottom line) is to increase our price point by 1%. A 1% change impacts our sales immediately. I know what some of you might be thinking, “um…Seth, what about the psychology of pricing? What about microeconomics? What about blah, blah blah?” Now, I’m not belittling your arguments, but I do want to point out a wonderful alternative. So let’s forget about the psychology of pricing for a moment and talk strictly about this 1%.

Case #1:
We’re selling macaroni & cheese. Current shelf price is $0.98.

  • If you increase that to $0.99, will unit sales decrease? No.
  • Will total sales increase? Yes.
  • Will expenses increase because of this price change? No.
  • Will operational and therefore net income increase? Yes.

Case #2:
We’re selling a 2012 Toyota Camry hybrid for $25,000.

  • If you increase that to $25,250, will unit sales decrease? Most likely no. (This item is definitely a normal good that has a low price elasticity of demand.)
  • Will total sales increase? Yes.
  • Will expenses increase because of the price change? No.
  • Will operational and therefore net income increase? Yes.

Case #3
We’re selling a proprietary B2B software solution. The current price point is $1,450.

  • If you increase that to $1,465, will unit sales decrease? No.
  • Will total sales increase? Yes.
  • Will expenses increase because of the price change? No.
  • Will operational and therefore net income increase? Yes.

Unit sales might eventually be hit if the same product can be found at a close competitor’s store (both physical and/or online) for a lower price. However, imagine these three scenarios:

  1. You own a proprietary product/service.
  2. Your product/service is a convenience purchase.
  3. Your product offering is different from your competitors’.

In all three situations, if we increase price by 1% we would see immediate results. And that’s only the tip of the iceberg. What other scenarios would yield the same results?

Let’s reminisce about #OWS and your company’s profits. Accountants believe expenses are 99% of the issue. Managers believe net income is 99% of the issue. Salesmen believe top-line sales are 99% of the issue. Regardless of who you are, let our 1% help your 99%.

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8 Comments on “The 1% – Gleaning Pricing Tips from Occupy Wall Street”

  1. Some of those are great. Others are pretty ordinary thought

  2. There are some interesting points in time in this article but I don?t know if I see all of them center to heart. There is some validity but I will take hold opinion until I look into it further. Good article , thanks and we want more! Added to FeedBurner as well

  3. thanks keep posting for more articles and more information thanks a lot. =)

  4. Youre so cool! I dont suppose Ive read something like this before. So good to seek out any person with some authentic ideas on this subject. realy thank you for beginning this up. this website is one thing that is wanted on the net, someone with a bit originality. useful job for bringing something new to the internet!


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