This case study is about developing a pricing strategy for 'Atlantic Bundle' - the new Trogon server with PEAS software before the SEEM tradesman. Questions: IQ : What price should Cowers charge Treaded. Com for the Atlantic Bundle. Think about the top-line revenue implications from each of the four alternative pricing strategies. Approximately how much money over the next three years will be "left on the table" it the firm were to give away the software tool for free versus utilizing one of the other pricing approaches.
We believe going for option 4 will be strategically more successful for the company, We recommend the price to be slated at 2647. The expected net profit accumulated over three If we go for option 1 will Is S 9785160 The expected net profit accumulated over three if we go for option 4 will is $264920. Q: How is the Matter likely to react to your recommendation? Matters of the strong view point that the new basic software should be provided to customer for free. So he Insisted on status-quo pricing as per the competitor - "Ontario computers".
Since Ontario Is charging 1700$ for one basic server, he also wanted to compete in the market at same price. Matter is initially not going to support this strategy (Option 4 - Value in use pricing). Therefore, it is imperative that lower provides a very strong business case along with numbers to influence/convince Matter to go for this relatively new option in the market. Please see attached an exhaustive calculation sheet demonstrating the choice of option 4 over other options.
Though the net profit for option 2 Is highest, but we are still not recommending Sequence ... 1. 0 Matter's ... 2. 0 Cadenza's reaction to .. 3. 0 Customer's .. 4. 0 Responses to price of competition only because the speed/efficiency of our basic server is 4 times higher. Q: How is Cadenza's sales force likely to react to your recommendation? Cadenza's sales force is going react positively with our recommendation since we have decided to option 4 pricing (Option 4 - Value in use pricing) in which the selling price has gone up from 2000 to 2647.
As mentioned, Cadenza's sales force salary has 30% impotent of commission, their commissions would go up. This is going to be a win- win-win situation for Atlantic computers, sales team and customers. Q: How are customers in your target market likely to react to your recommended pricing strategy? Since, we are going for a rather radical mechanism of pricing, which is not quite prevalent; it would not be easy to position this pricing easily. Therefore, it is important that we position this pricing appropriately; this can be done by proper training of Sales team members.
The sales team will have to do a Job of explaining the advantage of value-in pricing to customers. Q: What responses can be provided to overcome objects? Recommendations for overcoming objections: a. Extensive Training program for Sales team. B. Education of customers showcasing the benefits for this pricing methodology. C. Focusing on the financial advantages for the customers. D. Motivating the sales team by keeping the 30% commission intact, this would eventually increase their take home salary due to increase in CUP for option 4. Thank You!!!