Tuesday, September 22, 2009

Pricing new products

In pricing an item, this expert advised, you ought to double your manufacturing costs. Olsen and Anderson didn't know their manufacturing cost, so they guessed a figure and doubled it. Then they realized they might have to sell the modules through sales representatives, so they tacked on another 15 percent.

From "The Ultimate Entrepreneur: The Story of Ken Olsen and Digital Equipment Corporation".

A similar pricing story is also in "CEO" by Sandra Kurtzig founder of now defunct ASK.

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