Compare two pricing paths and see which one actually works.
Sarah had done her homework. Her CVP model showed she could hit her $10,000 monthly profit target two completely different ways:
Path A: Premium Pricing
Keep 24 projects
Raise price to $1,635
Profit: $10,000
Path B: Volume Play
Keep $1,350 price
Serve 39 projects
Profit: $10,000
"Both paths work on paper," Sarah told her mentor Jennifer. "But which one actually works in my business? How do I choose?"
The Friction Point
The math says both scenarios work. But real business has constraints that math doesn't see:
- Can Sarah's current team actually handle 39 projects?
- Will customers pay $1,635 when the competitor charges $1,350?
- If she raises prices and loses customers, does she end up worse off?
- Which variable (price, volume, costs) is most sensitive to small changes?
Why Scenario Comparison Matters
Before Sarah can use powerful Excel tools like Goal Seek and Data Tables, she needs to understand the business logic of comparing scenarios. Today's lesson builds that intuition by comparing pricing options by hand.
When you understand why one scenario beats another, automated tools become powerful accelerators. Without that intuition, you're just pressing buttons.
1. Sarah can hit $10,000 profit two ways: charge $1,635 per project, OR serve 39 projects at $1,350 each. Which is the better business decision?
2. If Sarah's competitor drops their price to $1,200, which pricing strategy becomes riskier?
3. What happens to Sarah's break-even point if she raises prices but loses 10% of her customers?
4. Before using Excel tools like Goal Seek, why should students first practice comparing scenarios by hand?
Discussion Prompt (3 minutes):
Think about Sarah's two paths. Share with a partner:
- What business information would help Sarah choose between Path A and Path B?
- What could go wrong with each path that the math doesn't show?
- Why might it be dangerous to just "let Excel figure it out"?
Coming Up Next
In the Introduction phase, we'll build structured comparison tables to analyze multiple pricing scenarios systematically. You'll learn to see exactly which variables matter most in pricing decisions.