New product and new service ideas abound. But actually selling them is another matter. Of more ultimate importance is whether they can be sold at a profit. Most inventors develop an idea then show it to a few friends who express their approval. The idea has passed muster, right? Wrong. Two problems. First, the audience sample is too small and second, an audience of friends is, by selection, biased in the inventor's favor. The profitability issue is also critical. Can the product or service be produced and sold at a profit? As a start a simple balance sheet should be constructed. Subtract the production cost from the selling price to get the gross profit. Then subtract administrative and marketing costs. Don't forget to include price discounts and distribution. What do you have left over? Obviously pricing is critical. Inventors tend to price too low. It is a simple process to lower a price. But raising a price is sometimes very difficult, particularly for an established product or service. The buying public does not like to see price increases. So how should a company go about assessing a new product opportunity? First, prepare a prototype sample of the product. Make certain that the price is such that when the manufacturing, design, distribution, sales & marketing, and administrative costs are deducted from the proposed selling price, a significant profit remains. Otherwise scrap the commercialization of the idea. The next step is to show the product to potential buyers. Get their feedback. Modify the prototype then establish a cost effective method of bringing the product to market. The final test is to sell the product in question. Yes, actually go out and get an order. Several orders are usually required if financing from a bank or other lending source is sought. The act of selling will bring out in the open critical issues such as need, competition and pricing. Once these hurdles have been surmounted then, and only then, is the product or service ready for introduction. Good luck! For assistance with your new product or service commercialization, contact: Brooks Fenno, CMC at SALESMARK Phone: (617) 536-0197 Contact me to discuss your problems, challenges, and needs. Literature available for established companies in Northeast include:
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