If you had the good fortune to invest with Warren Buffett in 1965, your return would be about 305,134%. That compares to about 5,583% for the S&P.
However, Buffett may be missing out on some easy money. This is according to Rafi Mohammed, who is the author of The Art of Pricing: How to Find the Hidden Profits to Grow Your Business
True, he thinks Buffett made a good deal when he purchased NetJets in 1998. The model – of fractional ownership – allows more people to use the service.
But, what happens during peak times, such as during on the Super Bowl or certain holidays? NetJets fills the increased demand by chartering jets – which is awfully expensive.
In other words, the company could increase profitability by adopting a simple strategy of peak/off-peak pricing. For example, if you have a non-peak option, there are black-out periods. A peak owner, however, will get to fly at all times.
According to Rafi: "A pretty straightforward and profitable fix to an expensive challenge, wouldn't you agree? The upside of better pricing is not limited to NetJets. I believe that every business can uncover their hidden profits through simple pricing changes."
Yes, even Warren Buffett can learn some lessons.
You can get a full analysis at Rafi's blog.
Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.
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