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Atlantic Computers

A BUNDLE OF PRICING OPTIONS


Overview
Manufacturers of servers and other high end products

Atlantic is market leader in traditional market with its product Radia, a premier product.

Competing for 30 years in server market. There are 2 market segments, i.e., Traditional and Basic markets.

Basic is a new market for which Atlantic has developed a server Tronn. Simultaneously, a software tool called
PESA (Performance Enhancing Server Accelerator) has also been developed.

Atlantics main competitor in Basic segment is Ontario, which has a 50% market share captured by its product
Zinc.
Pricing Strategy Alternatives
Status Quo Pricing
Offer PESA free of charge, price Tronn at $2000.
Loss of $20,00,000 spent on developing PESA
Product may seem equivalent to Ontarios Zink, and will have to compete for market share.
Not a very good option.

Competition based pricing


Zinks 4 servers = 1 Atlantic Bundle
Zinks price - $1700, so Atlantic Bundles price = 1700*4 = $6800
The price is very high as compared to the competitors product - Zink, and customers may not buy servers as per
projection
Not a very good option.
Cost plus pricing
Considering market is growing at a compounded rate of 36%, the figures have been calculated accordingly
Cost of 1 Tronn server - $1538
Cost of developing PESA $2000000.
So if we add these costs, total cost for Atlantic Bundle will be more than $1538.

Cost of 1 Zink server - $1214


So even cost plus pricing will be not very encouraging for Atlantic

Value in Pricing
Atlantic Bundle needs to be projected as a new product with high value addition one basic server with 4 times speed
Additional savings can be shown to customers by comparing 4 Zink server costs with 1 Atlantic bundle cost