Prices/server Cost/Server Ontario

High end $ 11,000 $ 7,586 Price

Basic $ 2,000 $ 1,538 $ 1,700

Year Market
High end Revenue Basic
2001 200,000 $ 2,200,000,000 50,000
2002 205,000 $ 2,255,000,000 70,000
2003 210,500 $ 2,315,500,000 92,000

Status - Quo Pricing

Price of Atlantic Bundle = Price of Tronn + Free PESA
Current Price $ 2,000
Cost of RnD $ 2,000,000

Year Sales Total Cost Revenue Contribution Margin

2001 2000 $ 5,076,000 $ 4,000,000 $ -1,076,000
2002 6300 $ 11,689,400 $ 12,600,000 $ 910,600
2003 12880 $ 21,809,440 $ 25,760,000 $ 3,950,560

Cost Plus Pricing

Year 2001 2002 2003 Total

Market Volume(units) 50000 70000 92000
Market share of Atlantic 4% 9% 14%
Total Sales 2000 6300 12880 21180
Estimated PSEA Sale (50%) 1000 3150 6440 10590

Cost of R&D PESA $ 2,000,000

Cost of Atlantic Tronn Server $ 1,538
Cost of PESA per Server $ 189
Total cost of Atlantic Bundle $ 1,727
30% Mark up $ 518
Final Price $ 2,245

Price of Atlantic Bundle = Cost of Tronn + Cost/PESA + Markup

Year Sales Total Cost Revenue Contribution Margin
2001 2000 $ 3,264,857 $ 4,244,915 $ 980,057
2002 6300 $ 10,284,301 $ 13,371,481 $ 3,087,180
2003 12880 $ 21,025,682 $ 27,337,250 $ 6,311,569

Per Unit Metrics for different Pricing Strategies

Pricing Strategy Price Cost Contribution Margin
Status - Quo $ 2,000 $ 1,538 $ 462
Competetive $ 6,800 $ 1,538 $ 5,262
Cost Plus $ 2,245 $ 1,538 $ 707
Value - In - Use $ 4,200 $ 1,538 $ 2,662
Cost
$ 1,214

Basic High end

Ontario Atlantic
Revenue Revenue Sales Revenue
$ 100,000,000 $ 50,000,000 29411.7647058824 $ 440,000,000
$ 140,000,000 $ 70,000,000 41176.4705882353 $ 451,000,000
$ 184,000,000 $ 92,000,000 54117.6470588235 $ 463,100,000

Competetive Pricing
Price of Atlantic Bundle = 4* Price of Tronn + Free PESA
Current Price $ 2,000 Competetive Price
Cost of RnD $ 2,000,000

Year Sales Total Cost

2001 2000 $ 5,076,000
2002 6300 $ 11,689,400
2003 12880 $ 21,809,440

Value - in - Use Pricing

Electricity Cost of Application

Basic $ 250 $ 750
High Perf $ 400 $ 750
Cost of Labor $ 80,000

Savings Info 2 Zink 1 Tronn

Electricity Savings $ 500 $ 250
Software License Savings $ 1,500 $ 750
Labor Costs Savings $ 4,000 $ 2,000
Cost of Server $ 3,400 $ 2,000
Total $ 9,400 $ 5,000

Savings $ 4,400
Profit sharing (50-50) $ 2,200
Price of Atlantic Bundle $ 4,200
 Year Sales Total Cost
2001 2000 $ 5,076,000
2002 6300 $ 11,689,400
2003 12880 $ 21,809,440

After observing the different pricing strategies as mentioned here, it is recommendable to launch the Tronn servers
with PESA on 50-50 ratio i.e. half of the expected sales with free PESA software and the other half with the chosen
pricing strategy which is the value-in pricing strategy.The reason for choosing this strategy is mentioned as below:
1. It provides applicable amount of revenues with second highest contribution margin.
2. Compared to the competitive pricing strategy,it is less aggressive as well as less risky.
3.This pricing strategy helps in replicating the savings thats attributed to the customer.

Team Members -
Ashique Hussain Bin Farid-B2019070
Bikasita Talukdar-B2019073
Shashank Bandwal -B2019098
Shreya Bhatia- B2019104
 High end Basic
Atlantic Atlantic
Sales Revenue with PESA Revenue Without PESA Sales PESA Sales
40000 $ 4,200,000 $ 2,000,000 2000 1000
41000 $ 13,230,000 $ 6,300,000 6300 3150
42100 $ 27,048,000 $ 12,880,000 12880 6440

e Pricing
Price of Tronn + Free PESA
$ 6,800.00

Revenue Contribution Margin

$ 13,600,000 $ 8,524,000
$ 42,840,000 $ 31,150,600
$ 87,584,000 $ 65,774,560

se Pricing

Labor Total
$ 40
$ 20
$ 80,000
 Revenue Contribution Margin
$ 6,200,000 $ 1,124,000
$ 19,530,000 $ 7,840,600
$ 39,928,000 $ 18,118,560

the Tronn servers

f with the chosen
tioned as below:
PESA Sales