Atlantic Computer

1736 WordsFeb 27, 20147 Pages
MKT 6336.501 | Pricing Atlantic Computer: A Bundle of Pricing Options Atlantic Computer Inc. is the largest player in the overall computer industry, competing in the server market for over 30 years with its high performance server, called Radia. Atlantic Computer and, more specifically, its Server Division is well known for providing high-quality and highly-reliable products, and it has developed a reputation for responsive post-sales assistance. Problems to Address: 1. Atlantic must choose a pricing strategy for the “Atlantic Bundle,” which consists of its TRONN server and PESA software tool, before the SME trade show. 2. Along with the right pricing strategy, Atlantic is also facing the hurdle of…show more content…
Competitive parity Price of 4 Ontario Zink servers = $1,700 x 4 = $6,800 Equivalent to 2 Tronn with PESA = $6,800/2 = $3,400 $3,400 3. Cost-plus Year 2001 2002 2003 Total Expected Sales (units) 4%x50,000 =2,000 70,000 =6,300 92,000 =12,880 21,180 Expected PESA Installations = 50% x 21,180 = 10,590 PESA Cost (per installation) = $2,000,000/10,590 = $189 Cost of Bundle (Server + PESA) = $1,538 + $189 = $1,727 + 30% Markup = $1,727 x 1.30 = $2,245 $2,245 4. Value-in-use Zink (4 units) Atlantic Bundle (2 unit) Product price: $1,700 x 4=$6,800 $2,000 x 2=$4,000 Electricity: $250 x 4=$1000 $250 x 2=$500 Software license: $750 x 4=$3,000 $750 x 2=$1,500 Total cost: $10,800 $3,000 x 2=$6,000 Savings by the Bundle: $10,800-$6,000=$4,800 50-50 sharing of the savings: $2,400 Price of 2 Bundles: $4,000 + $2,400=$6,400 Price of Bundle: $6,400/2=$3,200 $3,200 Evaluation of Alternatives: 1. Status Quo: This option has

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