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Atlantic Computers Pricing Option Essay

855 words - 4 pages

Individual’s Assignment
Atlantic Computer: A Bundle of Pricing Options

As Atlantic computer was largest manufacturer of servers and other hi-tech product, Jason Jowers has been assigned the task of developing the pricing structure for the Atlantic Bundle, a unique combination of the TRONN server along with the software tool - Performance Enhancing Server Accelerator – called PESA. The TRONN server has been specifically designed to address the current US market demand. In conjunction with the PESA, the TRONN ‘s performance capacity is four times faster than standard speed. Atlantic has continued to hold a significant portion (20% revenues) of the high-performance sector, but as the ...view middle of the document...

com = $ 4000 ( Per Atlantic Bundle = $ 2000

- Competition – Based Pricing:

• Price of one Zink Server = $1700

• 2 Tronn Servers + PESA software free = 4*$1700 = $ 6800

• Total Price of 2 Atlantic Bundles for Daytradejournal.com = $ 6800 ( Price of 1 Atlantic Bundle = $ 3400

- A cost-plus approach:

• The PESA software development = $ 2000000

• Cost of Tronn Server = $ 1538

• Total sale of Tronn servers sold in 3 years: 21180 (Unit)

• Total Sale of PESA software (50% of Tronn Server Sales): 10590 (Unit)

• PESA Cost per server = $ 2000000 / 10590 = $ 188.86 (with 30% Markup = $ 56.658 ( Hence, total PESA Cost per server is $ 245.518)

• Price of Tronn without PESA installed is $ 2000, therefore, the Price of Tronn with PESA installed is $ 2245.518 or $ 2246.

- Value-in-use Pricing:

| |2 Tronn servers |4 Zink servers |
|Price of server |$ 4000 |$ 6800 |
|Electricity |$ 500 |$ 1000 |
|Software License |$ 1500 |$ 3000 |
|Total Price |$ 6000 |$ 10800 |
|Savings |$ 4800 |
|Total Final Price |$ 6400 ( Per Atlantic Bundle = 4200 |

Therefore, the price in use method can generate more profits per unit than others. It is also easy to persuade the customers to choose as it shows that they can save $2400 when buying 2 Atlantic Bundles. In other words, the price is more justified and this will allow Atlantic Computers to maximize their profits. Moreover, it shows that this method is Customer – focused compared to the Company – focused in the third strategy:

| |Method 1 |M 2 ...

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