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Option 4: Value-in-Use Pricing Atlantic Computers

The document shows pricing and sales data for Atlantic Computers from 2001-2003 for different pricing strategies: - In 2001-2002 they used a value-in-use pricing strategy charging $4,200 per bundle, which led to high sales revenues and net incomes that increased each year. - Their per unit profit was $2,662 under this strategy. - They also compare this strategy to potential prices under free software, price matching competitors, and basic cost plus pricing models.

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Divyanshu Kishore
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43 views7 pages

Option 4: Value-in-Use Pricing Atlantic Computers

The document shows pricing and sales data for Atlantic Computers from 2001-2003 for different pricing strategies: - In 2001-2002 they used a value-in-use pricing strategy charging $4,200 per bundle, which led to high sales revenues and net incomes that increased each year. - Their per unit profit was $2,662 under this strategy. - They also compare this strategy to potential prices under free software, price matching competitors, and basic cost plus pricing models.

Uploaded by

Divyanshu Kishore
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

Atlantic Computers

Option 4: Value-in-Use Pricing


2001 2002 2003
Price of Tronn - - -
Price of PESA - - -
Bundle Sales Price 4,200 4,200 4,200
Market Size (Basic Servers) 50,000 70,000 92,000
Sales Revenue 8,400,000 26,460,000 54,096,000
Tronn Sales Volume 2,000 6,300 12,880
Cost per Tronn 1,538 1,538 1,538
Total Server Cost 3,076,000 9,689,400 19,809,440
Net Income 5,324,000 16,770,600 34,286,560

Per Unit Profit 2,662


Sunk Development Costs 2,000,000
Basic Server 2 Tronn Servers 4 Zinc Servers
Price of Server 4000 6800
Electricity 500 1000
Application Software Licenses 1500 3000
Cost of Labour 4000 8000
Total Cost 10000 18800
Savings Over Zinc 8800
50% of the Savings 4400
Cost of 2 PESAs 4000
Cost of 2 Tronn + 2 PESAs 8400
Final Price 4200
Atlantic Computers
Option 4: Value-in-Use Pricing
2001 2002 2003
Price of Tronn - - -
Price of PESA - - -
Bundle Sales Price 4,200 4,200 4,200
Market Size (Basic Servers) 50,000 70,000 92,000
Sales Revenue 8,400,000 26,460,000 54,096,000
Tronn Sales Volume 2,000 6,300 12,880
Cost per Tronn 1,538 1,538 1,538
Total Server Cost 3,076,000 9,689,400 19,809,440
Net Income 5,324,000 16,770,600 34,286,560

Per Unit Profit 2,662


Sunk Development Costs 2,000,000
Free Software Price = 2 X Zinc Cost Plus
Parameters 2001 2002 2003 2001 2002 2003 2001
Bundle
Price 2000 2000 2000 3400 3400 3400 2245
Sales
Revenue 4,000,000 12,600,000 25,760,000 6,800,000 21420000 43,792,000 4,490,000

Net Income 924,000 2,910,600 5,950,560 3,724,000 11,730,600 23,982,560 1,414,000


Left On The 29,652,000 5
Table -
Profit Per
Unit 462 1862 707
Cost Plus Value in Use
2002 2003 2001 2002 2003

2245 2245 4200 4200 4200

14,143,500 28,915,600 8,400,000 26,460,000 54,096,000

4,454,100 9,106,160 5,324,000 16,770,600 34,286,560


5,189,100 46,596,000

707 2662
Free Software Competition-Based Cost Plus
Unit Price 2000 3400 2245
Value-In-Use
4200

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