Cumberland Metal Industry

Pricing can play an important role in the success or disaster of any product. Too high a price and the product will fail; too low a price and not enough profits will be made to sustain business operations (Hisrich, Peters, & Shepherd, 2014). The key is to make the customer think that they are paying exactly the right price for the product. Anything else though in this regard means the product is not positioned well in the mind of the consumer. First of all, Gril-Kleen will have to decide on what sort of strategy it needs to pursue. This strategy is decided on three factors namely costs, margins and competition.

The minimum price is based on how much CMI spends producing one pad, and how much profit the company wants to generate. For estimating the total

The key to successful pricing is to match the product with the consumer's perception of value.

Coal was originally discovered in West Virginia in 1742, but wasn’t mined for economic benefit until the late 1800s. Coal occurred in most of the state’s counties and the coal boom brought in waves of laborers and their families. The work was hard and dangerous and the pay was not enough to justify the dangers of the occupation. These poor working conditions and unfair compensation would lead to riots, strikes, and civil incursions that would eventually attract the attention of the United Mine Workers of America (UMWA). The UMWA was started in Ohio in the late 1800s, but moved into West Virginia in the early 20th century. There were many influential figures within the organization, most notably John L. Lewis. Lewis was president

CMI was first manufacturer for CM pads, there was no direct competition and no available selling price in the market that CMI can take reference to. In view of that, CMI could use two test results of Kendrick and Corey to determine the economic value of CM pads. According to the Appendix I, the average economic value of CMI pad was 3,304. This value had taken into account of less CM pads required per job and the cost saving in equipment and labor . But the value to the customer should be higher due to some intangible advantage, for examples, lower accident claim as fewer set changes required for CM pads. Besides, lower health claim as CM pad contained non-toxic material. In order to gain the market share for this new product, we would recommend CMI to set the price of CMI pad around 85% of economic value, saying 2,805, promote to the market that it was much cheaper to use CM pads with superior performance and cost efficiency. Besides, different discounts can be granted to the customers depend on the length of the contracts signed and volume of the pads purchased, ranging from 10% to 25%.

When trying to determine the correct price, a number of factors must be considered: the market and its segments, the size of each segment, the ability to reach each segment, what distribution channels to target, whether to vary price by segment, the usefulness of promotional offerings, and whether the goal is to skim or penetrate each market.

The savings for the customer, however, comes from the savings in labor costs. Estimating a total of $714 labor costs/hour (Exhibit A), the approximate labor savings totals $5.08/foot driven (using Sanwal’s conservative estimates of 292,000,000 feet driven per year, page 5). Comparatively, CMI pads result in only $3.57/foot driven. On a job of 15,000 feet, the difference in value is $22,650 in saved labor costs alone. Consequently, a customer should be willing to pay $5.28/foot driven for the CMI Cushion Pads (see Figure 4). With this value-added, CMI can charge up to $2,837 for one pad, which would make the price exactly as much as the cheapest competitor (including labor costs). With that price, CMI would only have to sell 21,854 pads (which would service approximately 12% of the market, a feasible goal for CMI’s entrance) to make $62,000,000.00 (VP Joseph Fernandez’s approximate sales goal). The recommended CMI price, however, is $1986.34 (which is the value-capturing price of $2,837 with a 30% reduction). With an estimated 292,000,000-390,000,000 driven feet per year, the pile-driving

Therefore, the value of the CMI pad to a customer is $1,420.1333($8,520.8 / 6pads required in total) in the Colerick project and $1,904.16($9,520.8 / 5pads required in total) in Fazio project. The highest estimate of the value of the CMI pad to a customer (EVC) is $1,904.16 per pad.

The estimate of total potential market for heater/blower unit is 2737 units and 2737000 units for blankets (see exhibit 1). The direct cost of the heater/blower unit would be $380 and $0.85 per blanket. The initial investment, $500,000, for this system would cover the fixed cost of the company during first year of operation. Based on this basic information and other considerations, the company has to determine its pricing strategy for both

Cumberland Metal Industries (CMI) should price their new cushioning pads at $900 to maximize profit. CMI should begin by targeting the customers that will find the greatest value in the product an pay the most. This allow the company to maximize unit contribution, and leave available options for dealing with future competition and sales challenges.

Describe and give examples of some of the following types of pricing objectives: profit, market share, competitive effect, customer satisfaction, and image enhancements.

As CMI’s pads are a new product and that the pile-driving industry has paid little attention to cushion pads prior to CMI’s involvement, there is no other manufacturer that dominates the industry and therefore there is major room for growth. The product seems to be capable of generating a recurring revenue stream. There do not seem to be any barriers. Once CMI becomes the first and therefore, preferred provider of these pads, there is little reason for a customer to switch to a

As is known, pricing is one of the most important steps for business plan which needs good research, calculations and formulations. There are different pricing strategies to put into effect due to the market and product conditions, such as premium pricing, penetration pricing, economy pricing, price skimming(Voice Marketing, 2012). These four pricing strategies are main pricing policies. They form the bases for the exercise. However there are other important approaches to pricing. These pricing strategies are: Psychological pricing, product line

There are four vital companies who play a very important role in the metal industry and these are Anheuser-Busch companies, Pepsico, Coca-cola enterprise and Coca-cola company. These companies could have a great bargaining power over can companies while having multimple suppliers and being able to switch suppliers which gave the companies more flexibility to choose from if there was any issue with the price, quality or service.

Price, which is one of the most important elements of the marketing mix, can be difficult to get right. Pricing too high, or low, can negatively impact on customer satisfaction and revenue. Adopting a pricing strategy is necessary to achieve desired sales objectives (Chan & Wong 2005).