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By Editor: Deborah Barker

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It won’t make sense until it is too late. If another company accepts the new strategy, it must abandon its own. Internal struggles and politics will make it difficult to change. With limited resources, the market may not be able to support more than one player. Patents and other protections may make it difficult to copy. Imitation is unlikely until a high volume of sales is evident. Cost advantages are a natural result of high volumes. These cost advantages may make it difficult to catch up. Buyer loyalty or habit make it difficult to switch to the imitator.

1. Sale 2. Renting 3. Charging by the transaction 4. Advertising and subscription models 5. Licensing 6. Giving away the product and selling the after-sale support and services 7. Mixture of payment mechanisms (Subscription price + advertisement) Chemical Please Submit Examples Software Please Submit Examples Algorithm Technical Please Submit Examples Determine the Required Cost Price Business Model Cost Business Please Submit Examples 1. Create a Cash Flow Model 2. Exercise the model to investigate different possibilities 3.

This means that we set the target price before we set the target cost. The target cost must then be dictated by the business needs. After a cursory look at the target price and the target cost, it may seem improbable that the cost target can be hit at this step. Remember that we are very early in the overall innovation process. Identify this as a risk and move on. Future steps will be used to innovate and decrease the actual costs to meet the target. The final step is to create a specification that reflects the ideal value curve.

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25 Beautiful Homes - February 2012 by Editor: Deborah Barker

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