Atlantic Computer: A Bundle of Pricing Options
Autor: Arjit Gupta • December 9, 2015 • Case Study • 578 Words (3 Pages) • 3,212 Views
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Case Analysis Note PGP/19/Section F |
Atlantic Computer: A Bundle of Pricing Options |
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Atlantic Computer’s new server –the Tronn had been developed to specifically meet an emerging U.S. marketplace opportunity. The performance of this server increases 4 times with the use of their new software called PESA. The combination of Tronn with the PESA tool, named as the ‘Atlantic Bundle’ is to be priced before SME trade show by following any one of the four choices as detailed below:
Option | Pricing | Features and Analysis | |||||||||||||||
1 | Status quo pricing | Price Tronn at $2000 Offer PESA free of charge and incur a loss of $20,00,000 spent on PESA software development cost | |||||||||||||||
2 | Competition Pricing | 1 Atlantic bundle = 4 Zink servers Price of 1 Atlantic bundle = 4*1700= $6800 | |||||||||||||||
3 | Cost plus pricing | Cost of 1 Tronn Server= $ 1538 Cost of developing PESA= $2000000 Cost of 1 Zink server = $ 1214 No of PESA loaded servers sold= 10590 PESA development cost per unit = 2000000/10590= $189 Price with PESA(30% markup) = $ 2245 | |||||||||||||||
4 | Value-in-use pricing (conservatism approach is used) |
Annual Saving on using 2 Atlantic bundles = $4800 Price of Atlantic Bundle = $6400 |
Pricing strategy for Day TraderJournal.com, HGIDMM and Look Sharp Advertising
We recommend Value-in-use pricing as it the best fit model for all their server need and requirements
Recommendation for Cadena’s sales force:
Emphasize on Performance boost up with use of PESA software tool
Emphasize on the lower acquisition and possession costs
Ensure excellent after sales service for customers
Ontario Zink management team’s likely step to Atlantic Bundle’s threat and Atlantic’s probable response:
1. Ontario may slash the price of Zink
Minimum Price = $ 1214
Using competition pricing, Atlantic can prove that 1 Atlantic bundle= Price of 4 Zink servers i.e. $ 4865
which is greater than Atlantic Bundle’s price of $ 2245
2. Ontario may come up with their own version of PESA software tool
Atlantic will enjoy the first mover and pioneer advantage. Since their software development cost will be recovered in three years, they can start providing PESA for free thereafter.
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