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The Complete Idiot's Guide to MBA Basics, 3rd Edition by Tom Gorman

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Pricing Problems

Pricing mistakes can kill a good product—and even a good company. The first requirement for a “proper” price is that you must be able to make money at the product’s price point. If the product costs more to make than you are selling it for, there’s almost no sense in making it. (I say “almost” because you may be able to use the product as a loss leader—that is, a product that doesn’t make a profit but lures customers to try other products.)
 
You must be able to sell the product at a competitive price. If your competitors can underprice you on a product of similar quality, how will you get business? Don’t rely on your relationships with customers or the skill of your sales force to overcome prices that are above the competition’s. ...

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