This is the experience curve for the fictional Motorcycle STICKER industry. The average slope is .167 meaning that for every doubling of output costs drop 83.3%. Xtreme Stickers Inc. just came out with a brand new product that is better than anything else in the industry. Even though we are talking abut stickers competitors cannot copy you very quickly. As the CEO of Xtreme Stickers Inc. you need to decide how to price your stickers. What pricing model will you choose?

Aggressive Pricing Model

Explanation:

In a scenario such as this one, the best pricing model would be an aggressive pricing model. This is because due to the slope being 0.167 this means that the faster your business grows the lower prices you can charge for your product while still making the same profit margins. This is due to your output costs dropping by more than half as you grow. These lower prices also allow you to compete with the other industries in the market and outperform them drastically due to being able to charge a much lower price for the same product as the competition.

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