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It’s become common wisdom that the price of a thing should be the cost of producing it plus an X factor for desired profit. This is more common than wisdom. A thing should cost the value that a willing, able buyer places on it.

The problem with all the MBA/CPA/Cost-Plus guys, is that they assume everything effecting the product happens within the four walls of the firm. Fact is, most of what effects the product and the firm is outside of the firm, in the marketplace.

No matter what your cost accountant says, the customer determines the price—unless you’re leaving money on the table.

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