Atlantic Computer Analysis
Atlantic Computer Analysis
Atlantic Computer Analysis
For 2 x Zink
For 1 x Tronn
Electricity
500
250
Admin
Software
4000
1500
2000
750
Server
3400
2000
Total
9400
5000
Savings
4400
50/50 Split
2200
Final Price
4,200
Benefits:
Cons
Priced 2X higher than the status quo (traditional)
approach
Customer might not be aware that the software price is
included in the pricing
Question 2
Think broadly about the top-line revenue implications from each of the four
alternative pricing strategies. Approximately how much money over the next three
years will be left on the table if the firm were to give away the software tool away
for free (i.E., Status quo pricing) versus utilizing one of the other pricing approaches?
Revenue Implications
Revenue Implications
Revenue Implications
Software Free
2002
2003
2,000
2,000
2,000
40,00,000
126,00,000
9,24,000
29,10,600
2001
Bundle Price
Sales Revenue
Net Income
Left on Table
Profit Per Unit
Breakeven
Units
Price = 4 x Zinc
Cost Plus
2002
2003
6,800
6,800
6,800
257,60,000
136,00,000
428,40,000
59,50,560
105,24,000
331,50,600
2001
Value in use
2002
2003
2,245
2,245
2,245
875,84,000
44,90,000
141,43,500
677,74,560
14,14,000
44,54,100
2001
2002
2003
4,200
4,200
4,200
289,15,600
84,00,000
264,60,000
540,96,000
91,06,160
53,24,000
167,70,600
342,86,560
2001
1016,64,000
51,89,100
465,96,000
462
5,262
707
2,662
4,329
380
2,829
751
Question 3
How is Matzer likely to react to your recommendation?
Chris Matzer-Profile
Jowers Recommendation:
Matzers Reaction
Question 4
How is Cadenas sales force likely to react to your
recommendation? What can Jowers recommend
to get Cadenas hardware-oriented sales force to
understand and sell the value of the PESA
software effectively?
Fixed (70%)
Salary
Variable
(30%)
benefits
Salesforce should be ready to leverage on the
new offering and look forward to make higher
commissions
Question 5
How are customers in your target market likely to react to your
recommended pricing strategy? What response can be provided to
overcome any objections?
Challenges
Initial Resistance due to per unit
higher acquisition cost
Reluctance to pay for software as
traditionally given for free
Resolutions
Higher Perceived Value
Focusses on all the operational and
additional costs
Show that PESA is the driver for low cost
Question 6
How is Ontario Zinks senior management team likely to react to the
Atlantic Bundle?
Atlantics Perspective
Lifetime Cost will still be lower
Will take time to develop. Can gain sizable market
share by then
Zink will have higher operational costs. Atlantic can
focus on online sales after gaining share and visibility