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Commercializing Great Products with Design for Six Sigma by David W. Bacon, Randy C. Perry

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Chapter 10. Defining Product Value

"Customers buy products based on value, not based on price." Many people still hold fast to the opinion that price is the only significant factor in a customer's buying decision. There is no doubt that selecting the right price point is critical in commercializing a successful new product. However, balancing the price of a new product against the benefits the product provides our customers is even more important.

The Value Concept

What is value? Simply put, value is the amount of benefit that a customer receives from the use of a product or service minus the price the customer is asked to pay for the product. In more quantitative terms:

Equation 10-1

We must now further define what we mean by "Benefits Received." ...

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