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Atlantic Computer – A bundle of pricing options
Rasha Elsohaily  Saba Khan  Tabish Syed  Abduvali Umarov 
American University of Sharjah School of Business and Management Marketing Management MBA (614) Spring Semester 2012
15 May 2012
This price is higher than the current market price but it is still cheaper than 2 zink servers. For example. The price that Jowers should charge is $2. According to the test results one Tronn server loaded with PESA software tool is equivalent to four basic servers. software license fees and labor costs i. He should use the value-in-use pricing strategy because the Tronn server with the PESA software tool has cost savings for the customer. The added advantage of using value-in-use pricing is that it will help company recover its R&D costs for the development of PESA software tool.e.The Atlantic computers company is launching a new server “Tronn” along with the Performance Enhancing Server Accelerator (PESA) software tool. Although the price based on competition will generate the maximum revenue for the company. Selecting the price of the Atlantic bundle based on cost-plus pricing would be difficult because it would be difficult to drive the cost of R&D and include it in the bundle price. Jason Jowers. The advantages of using Tronn with PESA are:- Increases performance/speed of the server by 4 times for web services and 2 times for file sharing services Minimizes possession cost as fewer servers needs to be purchased Reduces the operation costs by reducing annual electricity charges. the newly hired Product Manager. if we 1 .700 for 1 tronn server with PESA software. Tronn server and PESA software tool. needs to devise a pricing strategy for “The Atlantic Bundle” i. Tronn with PESA provides First order savings and second Order Savings to its customers. If the Company continues with the traditional pricing would mean that the company ignores the R&D cost for the development of the PESA tool and the customer may perceive it to be similar to Ontario’s Zink server as the price of both servers will be similar.e. less administrators required These savings that the Tronn provides to its customers can be shared with them using the value-in-use pricing strategy. it is not the best pricing option as price equivalent to 2 Zink servers would make it very expensive and unappealing to customers and there will not be much value left for the customer.
700 from value in price approach is much higher than the current market price therefore consumers will be skeptical about the price might not be willing to pay that price. The sales force should market the Atlantic bundle with emphasis on the superior performance and the cost savings. Also. the Atlantic bundle is not suitable for the complex applications. 2 . The price $2.use a 1 year recovery period the cost per server would be very high which will increase the overall price of the Atlantic bundle.
999 $2.000 $18.700 $2.000 $8.000 $189 $1.000 14% 12.000 2002 70.000 $189 $1.800 $10.35% 21.000 9% 6.880 21.800 $5.000 Zink 4 servers $6.000 $8.000 4% 2.000.400 $2.000 $500 $1.245 Price of Server Annual Electricity Cost Software License Cost Labor Cost Total Price Total Saving to customer Sharing 50/50 of the value Price of Atlantic Bundle (1 Tronn server with PESA) Total R&D Cost R&D Cost per server (3 year recovery and 50 % attach rate) Total Cost Markup from Cost Exhibit 5 – Revenue Forecast 2001 50.590 $1.500 $4.180 3 .727 56.300 Total Market Market Share Volume Share Total Sales in 3 years 2003 92.Exhibit 1 – Traditional pricing Price of Tronn Server PESA software tool distributed free Exhibit 2 – Competition Based Pricing Price of Zink Server Price of Tronn Server (equivalent to 2 Zink Server) Exhibit 3 – Cost-plus Pricing Tronn Servers sold in 3 years Tronn Servers with PESA (50% attach rate) PESA cost per server (recovering cost of development in 3 years) Price of Tronn Server (30% markup) without PESA Price of Tronn Server with PESA Exhibit 4– Value-in pricing Tronn 2 servers $2.400 $2.000 $3.700 $3.180 10.800 $1.
000 $12.292 $2.000 $25.245 $4.333.000 $4.600.792.244.012.000 $72.245 $27.760.315 $2.591 $2.999 / $2.420.400 $6.000 $3.000 $3.999 / $2.700 $5.776.000.010.400.Traditional Pricing Revenue Total Revenue Competition Based Pricing Revenue Total Revenue Cost plus Pricing Revenue Total Revenue Value-in-Pricing Total revenue Total Revenue $2.186.000 $1.000 $2.000 $1.386 $44.360.400 $43.800.369.000 $2.245 $13.000 4 .000 $1.400 $21.700 $34.000 $57.999 / $2.000 $3.700 $17.000 $42.947.