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Profitability Objectives
YES
NO
1. The firm is the low-cost supplier in the market—that is, the firm has a competitive cost advantage.
2. The firm is the price leader—other sellers follow the firm’s pricing move.
3. There is an internal required rate of return for new product introduction.
4. There is a short lead time for new products before competitors will likely enter the market.
All four elements must be considered when developing a profit-oriented pricing strategy.