Pricing strategy, liquidity, capacity are key components to business success

Pricing strategy, liquidity, capacity are key components to business success

Pricing strategy, liquidity, capacity are key components to business success (This story is written by Debra Christein, a partner with B2B CFO who serves on the Board of Directors of the Women’s Exchange of Washtenaw, as well as co-chair of its annual conference, WXW Forum12.) Have you ever made a paper airplane? Did it fly? If you’re like me, probably not. And you know that it didn’t matter how many times you launched it, how fast you threw it or the angle – it would not fly, right? Also, if you’re like me, every once in a while you made one that flew. What was the difference? What special blend of tail height, wing breadth and body length made this piece of paper aerodynamic? Could you reproduce it in the next version? Could you produce success in a paper airplane ten times larger with a bunch of new features? Debra Christein Paper airplanes are a lot like business models. If a business model is not sound, if it’s not built to create a successful business, you can’t work hard enough or long enough to create a successful, sustainable company. The components of a successful business model are pricing strategy, capacity, infrastructure, and liquidity. Pricing strategy refers to the relationship of what you charge for your product or service to the cost of providing that service. If the price you can charge in your market does not cover the direct costs involved and an adequate portion of the general company costs, well, as the old saying goes – you can’t make it up in volume. In the airplane analogy, this...