atlantic computer case

1 The pricing strategy for Atlantic computer bundle,which is Tronn server with PESA tool, need to be decided.there are four options available: 1.stick with company tradition by charging only for hardware and give the PESA software for free using a status-quo pricing. 2.charge a price equal to what the customer would pay for four Ontario Zink servers usingcompetition-based pricing. 3.Charge a price using cost-plus pricing. 4.charge a price based on value-in- use pricing. Status-quo-pricing:2 servers+Free PESA:2*2000=4000 Competiton Based Pricing: Ontario Price:4*1700=6800,6800-2*2000=2800(for 2 PESA),1400 for PESA Cost Based Pricing: Server units:4%*50+9%*70+14%*92=21180,.PESA Units:21180*50%=10590,Cost/ PESA unit=2m/10590=188.86,Price/PESA unit=188.86*1.3=245.51,2Bundle Price:2*2000+2*245.51=4491 Value-In Use Pricing: total savings=4000(less labor)+500(less electricity)+2800(only 2 servers)+1500(less software)=8800,50-50 split=4400,Price/PESA=2200,total price=2*2000+2*2200=8400 The revenue of each option will be: 1.Status-quo:10590*4000=42360000 competition:10590*6800=72012000 Cost:10590*4491=47560000 Value in Use(50-50,shared value):10590*8400=88956000

2The most likely recommendation thatAtlantic will choose is Value-In use pricing:1.It's easier to show value by showing the monetary benefits to customers.2.the company will also obtain a 50-50 split (profit sharing) when sales increase. 3.a price -war will not be beneficial to Atlantic Computer,if Ontario lower the price, it will be difficult for Atlantic to survive. 4.It's more obvious for customers to know the savings by purchasing Atlantic Bundle instead of buying four Onario Zink servers.(Using this pricing strategy, customers will know that they'll save a lot by having fewer servers,less labors ,electricity and secure fewer software app licenses.)this will be a differenciation strategy also for Atlantic Bundle.
3 Inthe near short run, Ontario will not