June 19, 2012
Clearwater Technologies, Inc. was a small, publicly traded technology firm outside Boston. It was founded by four MIT graduates. They saw an opportunity in a market and felt that they could run a company that could meet the needs of a market that larger firms ignored. Clearwater Technologies was the leader in customer relationship management servers for sales forces of small-to medium-sized companies. The product they were selling was called QTX.
It was a sales support server that would allow more than one user to maintain their sales account databases at the same time. Clearwater Technologies customers typically were those who needed less than a 30 seat server. One opportunity the company has would be to sell its product completely through a value added reseller. This would allow them to focus more on the product design and possible consider offer a larger seating capacity system in the future.
1. Identify and evaluate Clearwater Technology’s existing pricing on the QTX line. What are its pricing objectives? With the introduction of the upgrade, should Clearwater reconsider its pricing strategy?
With the introduction of the upgrade I believe the company should carefully consider this pricing strategy because a new unit would provide customer s with the luxury of having two boxes which would be good in the event of product failure but would be costly and would only be an option if one could afford it.
2. Evaluate Jefferies pricing considerations for the upgrade. Are there other pricing factors that Jefferies might consider?
The company should capitalize on the fact that customers are committed to them but not rip them off. Customers need to be enticed to buy the largest possible seat capacity the first time they buy. You’re never 100% sure that they’re going to come back for upgrades. The price of the upgrades shouldn’t be lower than the...