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Disciplined Entrepreneurship Workbook by Bill Aulet

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STEP 16Set Your Pricing Framework

WHAT IS STEP 16, SET YOUR PRICING FRAMEWORK?

Determine a framework to test pricing for your new product, and make a decision on what the initial price will be.

WHY DO WE DO THIS STEP, AND WHY DO WE DO IT NOW?

Small changes in pricing can have dramatic impact on your profitability, so there is great incentive to get this right. It should also be a price that is acceptable to you and your customer so that you have a sustainable business. You are able to do this step now because you have made your initial decision on business model, and the pricing framework flows from the decisions you made in your business model.

Diagram shows scale in semicircle pattern from price to profits and man handling two headed pointer pointing at ten percent profit and one percent price of semicircle scale.

Even though it is impossible to know the right pricing for your new product just yet, you will do some analysis now and make some decisions to get started, but also build a framework to address the pricing decision as you move forward.

PROCESS GUIDE

It is virtually impossible to know your optimal price for your new product until you are able to offer it at scale and see how customers actually respond, as opposed to what they tell you they would hypothetically do. However, pricing is extremely important as even small pricing changes ...

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