Atlantic Computer: a Bundle of Pricing Option

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Atlantic Computer: A Bundle of Pricing Option

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|Submitted To |Prof. Joffi Thomas | |Date of submission |July 29, 2009 | |Submitted By |Ajay Kumar Meena |PGP/13/249 | | |Arnab Sarkar |PGP/13/259 | | |Darpan Gupta |PGP/13/269 | | |ManiKantha Garre |PGP/13/279 | | |P Vignesh |PGP/13/289 | | |Sailesh Kumar |PGP/13/299 | | |Dinesh Joshi |PGP/13/309 |

Major Issues:

1. What price should Jowers charge Daytraderjournal.com do the Atlantic Bundle (i.e., Tronn Servers +PESA software tool)? Calculate the prices for alternative pricing strategies. (Note from the Planning the Strategy section in the case that Jowers make a conservative estimate that two Tronn servers plays PESA equals the performance of four Ontario Zink servers.)

2. Anticipate the reactions to your recommendation and formulate plans to address them, for the following individuals/groups: (a) Matzer (b) Cadena & salesforce (c) Sr. Management at Atlantic (d) Customers (e) competition (Ontario Zink’s Sr. Management)

3. Compare the topline revenue implications of alternative pricing strategies to the firm over the next three years?

Pricing Options:

• Status Quo Pricing: Consider cost of Server only and PESA for free

Price of one Tronn Server = $2000

2 Tronn Servers + PESA software free = 2*2000 = $4000

Total Price of 2 Atlantic Bundles to Daytradejournal.com = $4000

Per Atlantic Bundle = $2000

• Competition Based Pricing: Pricing the Tronn servers based on price of competitor server (Zink by Ontario) and PESA for free. Since 2 Tronn Server with PESA software is equivalent to 4 Zink servers

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

• Cost Plus Approach:

Cost incurred in PESA software development = $2000000

Cost of Tronn Server = $1538

|Market volume (in units) |2001 |2002 |2003 | |Total | | | | | | | | |Market Volume of Basic Server |50000 |70000 |92000 | | | |Atlantic Share ( in %) |4 |9 |14 | | | | | | | | | | |Estimated Total Sale of Tronn Server |2000 |6300 |12880 | |21180 | | | | | | | | |Estimated Total Sale...
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