The better mousetrap

“If you think you’ve got a better mousetrap, I’ve a tool to help you price it.”

– Richard L. Smith

Methodology

1. Net Present Value – sums cash flows to present
2. Compares you to your competitor and/or a target
3. Calculate both NPVs and ferrets out your premium piece price
4. Keys – Discount rate and your own assessed quantification of your product’s better performance

Net Present Value Primer

  • Time Value of Money
  • Uses public domain discount rate tables
  • Sums up cash flows to the present