Why is undercutting a poor strategy choice when making initial pricing decision
economics
Description
Part 1.
As an entrepreneur, one of the most significant and strategic decisions you will ever make during the life cycle of your new venture
will be one of selecting your pricing approach and setting your initial price. Few decisions have such wide-ranging implications for
the success of the venture, especially as this decision directly impacts every area of the business, such as customer acquisition, the
break-even point, and profitability. Research several newly emerging start-ups that are focused on product-based offerings for the
consumer sector that you find interesting. Select one and in a two-page paper using the principles from the text, identify, assess,
outline, and analyze the totality of the pricing models, pricing strategies, and pricing decisions. Also include whether you agree with
each and be sure to explain your answer (if you do not agree, indicate what changes would you make).
Part 2.
Answer the following five questions in a two-page paper.
1. After doing some research, what is the Pricing Paradox? How is this best managed by new entrepreneurs as they make their pricing
decisions?
2. Why is undercutting a poor strategy choice when making initial pricing decisions?
3. Is it necessary to have the same margins for all products? Why or why not?
4. Why is following your competition a poor pricing strategy choice?
5. Do you agree with the following statement: Discounting is always a better choice and easier to do than adding additional value?
Explain your answer.
