Capturing Value

A good idea can appeal to a small percentage of the population and still have great value. Consider high-end luxury goods such as jewelry, yachts, and paintings. Here, design is extremely important. There are also simple items, such as those for horse owners, hobbyists or butterfly enthusiasts. These may also have good value given a solid approach and healthy margins. Other good ideas can appeal to the masses. Those small paper sleeves that keep your fingers from getting too hot and reduce the need for additional cups add value to millions of people every day by reducing the costs to coffee shops while reducing solid waste.

People often want to take the cost of a product and then mark it up some amount and say that's the selling price. It's important to keep cost and price separate. If you can sell something for $100 that only costs $1 to make, why sell it for $2? Find the right retail price based on the features you're providing – forget about the costs. Find out how much it costs to make the product that has the features people want - forget about the retail price. Keep those two discussions totally separate. Give these numbers to your accountant. Accountants are great at pointing out what you did not think about, and may even help you see value you did not know existed.

This all leads back to the section about Exit Strategy at the beginning.
Passion, drive, determination and a good product development team are all vital parts of the product development process!