Quick learn
A fictional kitchenware company compares ₹799 with ₹999. Unit variable cost is ₹450. Expected monthly demand is 1,200 and 850 units respectively. Launching online in one city costs ₹2 lakh for the month.
Deep dive
Estimate willingness to pay using a credible alternative and actual purchase behaviour. Model net realized price, cost to serve and demand together. Include commissions, returns or promotions where they change by channel.
Worked decision
At ₹799, monthly contribution after launch cost is ₹2,18,800. At ₹999 it is ₹2,66,650. Break-even at ₹999 is 365 units, rounding the required quantity up.
When the decision changes
If returns reduce realized net price at ₹999 by ₹80 per unit, the high-price option falls to ₹1,98,650. Pilot pricing within a comparable audience and track realized price, delivered units and returns.