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Pricing Boundaries

FastTrac, Kauffman Foundation

Although pricing is not an exact science, you should begin the process by determining your pricing boundaries. The first step involves narrowing down your options between clear boundary conditions. After you complete this step, you will be able to refine your pricing strategies.

Businesses are structured to have a fixed ranged within which a price can normally reside-somewhere between a ceiling price and a price floor. The highest price you can ask, the ceiling price, is usuallyset by your customers. If you go above that price, you lose customers. The lowest price you can charge, the price floor, is determined by yourcosts. If you go below that price, you lose money on each sale.

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