CASE: Atlantic Computers: A Bundle of Pricing Options

1.What price should Jowers charge Daytraderjournal.com do the Atlantic Bundle (i.e., Tronn Servers
+PESA software tool)? Calculate the prices for alternative pricing strategies. (Note from the Planning the
Strategy section in the case that Jowers make a conservative estimate that two Tronn servers plays PESA
equals the performance of four Ontario Zink servers.)

Based on all the expenses incurred or to be incurred by the company in terms of overall Atlantic Bundle,
breakeven is achieved at 752 units which amounts to the value of $4,200. Hence, considering the expected
pricing from all the four strategies:

a) Strategy 1: Charging only for hardware and giving away the PESA software tool away for free,

Atlantic Bundle Price = Tronn Price + PESA Price = $2000 + $0 = $2000.

b) Strategy 2: Bundle price equal to what customers would pay for 4 Ontario-Zink servers,

Atlantic Bundle Price = 4 Zink servers Price = 1700*4 = $6800

c) Strategy 3: Price based on cost plus approach,

Atlantic Bundle Price = $2707 = {(Tornn & PESA cost); (expected rise/mark-up percentage); (Overall
Volume figures); (fixed expenses); (Miscellaneous)}

d) Strategy 4: Price the bundle basis software and hardware package’s development costs and
charging a premium above the overall cost,

Atlantic Bundle Price = $ 4200 = Tronn Price + PESA Price + 50% of the amount saved from using
Atlantic over Zink (equivalent to, cost incurred on Zink – cost incurred on Atlantic = approx. $2200)

The cost and strategy that should be opted is 4th.

2.Anticipate the reactions to your recommendation and formulate plans to address them, for the
following individuals/groups: (a) Matzer (b) Cadena & salesforce (c) Sr. Management at Atlantic (d)
Customers (e) competition (Ontario Zink's Sr. Management)

a. Matzer: Believes in Charging only for hardware and giving away the PESA software tool away
for free.
b. Cadena & salesforce: The salesforce needs further training regarding this product. Salesforce should
be kept motivated by- higher sales corresponds to higher commission per server sales along with the
intact model.
c. Sr. Management at Atlantic: Needs further convincing to move on from tradition model and
introduce better strategies in order to compete with Ontario Zink.
d. Customer: Cost efficiency along with better performance available for every consumer segment,
further marketed properly with attract customers.
e. competition (Ontario Zink's Sr. Management): They might reduce the price to its server. Zink’s
management can come up with similar software.

3.Compare the top line revenue implications of alternative pricing strategies to the firm over the next
three years?
In the traditional methodology of pricing for Atlantic bundle the organisation would be giving away a huge
amount worth benefits, that they could have earned. Atlantic bundle is a product that could revolutionise the
whole market regarding the related technology in favour of the company itself and hence allowing them to gain
the market share and attract more customer in all possible segment, the firm believes are favourable to its
product. Hence, properly designing the pricing strategy is a must for the organisation to gain upper hand in the
market.