Management: How to create a profitable business idea
Breakthrough entrepreneurship is about solving problems -- but it’s only half the battle. If you’ve brainstormed a business idea and have a sense of the customer pain your product can solve. The next step in your billion-dollar business generating process is to figure out if you can fill that need profitably.
To do this, you need to understand the value proposition you’re creating. Estimate the economics as best you can so as to figure out ahead of time if customers will actually agree to purchase your product or service for significantly more than it costs you to produce it.
Three factors make up your value proposition:
Production cost: What will it cost you to develop and produce your product or service?
Customer utility: What dollar amount can you use to represent the degree to which your customer will value the product?
Price: How much will your customer be willing to pay?