Suppose your research into Melinda leads you to conclude that to realize the largest possible TAM, you need to offer the product at no more than $99. The bill of materials (BOM), however, comes to $250. Now you have two choices to suggest. First, alter the specs, strip out features, or take other actions that will reduce the BOM to below $99. Second, construct a financial plan that shows heavy losses in the early days of release, but also shows that the losses can eventually be mitigated with BOM reductions as the product achieves scale or can be enhanced with some additional source of revenue
...more
