Cumberland
Cumberland Metal Industries – Decision Sheet
Objective: To devise a pricing strategy which would allow Cumberland to extract maximum value in the first year and later operate at expected margin
Estimation of Market Size Number of feet of driven piles* | 290000000 | 390000000 | Amount of feet per set (1) | 10000 | 10000 | Amount of feet per set (2) | 20000 | 20000 | Number of pads per set | 5 | 5 | Market size (1) | 145000 | 195000 | Market size (2) | 72500 | 97500 |
Value provided | Fazio | Colerick | Cost of using Asbestos per 10000 feet ($) | 1666.7 | 667 | Time saved every 10000 feet in piling (hrs) | 12.5 | 16.7 | Time saved every 10000 feet in pad change (hrs) | 13.8 | 4.4 | Cost per hour to contractor ($) | 386.75 | 386.75 | Value of time saved per 10000 feet ($) | 10180.1 | 8138.9 | Total value offered per 10000 feet ($) | 11846.8 | 8805.6 | Value offered per pad ($) | 2369.4 | 1467.6 |
Apart from the savings for the Contractor, Metal cushion pads will also provide a replacement for asbestos which has well publicized health dangers as well as provide with safety for laborers due to its low temperature of 250 F.
Cost to Company Cost heads | Value | Variable cost ($) | 69.18 | Depreciation Cost per unit ($) | 5 | Interest Cost per unit ($) | 3.75 | Net Cost ($) | 77.93 | Contribution margin | 50% | Sales and Distribution margin | 40% | Price as per costing ($) | 779.3 |
Action Plan * Price a pad averaging it between the cost and the value it offers i.e. $1,120. * Target sales and capacity of 18,000 pads in the first year with an investment of $425,000 ($50,000 for the first 250 and $75,000 for additional 250 per month). Return on Investment is 3000%. * Publicize the value it offers to the rental companies as they form a major class of influencers. The revenue loss of rent and asbestos sale for a 10,000 feet job comes out to be $2,183 which is more than covered by the extra 40% margin on sale
Objective: To devise a pricing strategy which would allow Cumberland to extract maximum value in the first year and later operate at expected margin
Estimation of Market Size Number of feet of driven piles* | 290000000 | 390000000 | Amount of feet per set (1) | 10000 | 10000 | Amount of feet per set (2) | 20000 | 20000 | Number of pads per set | 5 | 5 | Market size (1) | 145000 | 195000 | Market size (2) | 72500 | 97500 |
Value provided | Fazio | Colerick | Cost of using Asbestos per 10000 feet ($) | 1666.7 | 667 | Time saved every 10000 feet in piling (hrs) | 12.5 | 16.7 | Time saved every 10000 feet in pad change (hrs) | 13.8 | 4.4 | Cost per hour to contractor ($) | 386.75 | 386.75 | Value of time saved per 10000 feet ($) | 10180.1 | 8138.9 | Total value offered per 10000 feet ($) | 11846.8 | 8805.6 | Value offered per pad ($) | 2369.4 | 1467.6 |
Apart from the savings for the Contractor, Metal cushion pads will also provide a replacement for asbestos which has well publicized health dangers as well as provide with safety for laborers due to its low temperature of 250 F.
Cost to Company Cost heads | Value | Variable cost ($) | 69.18 | Depreciation Cost per unit ($) | 5 | Interest Cost per unit ($) | 3.75 | Net Cost ($) | 77.93 | Contribution margin | 50% | Sales and Distribution margin | 40% | Price as per costing ($) | 779.3 |
Action Plan * Price a pad averaging it between the cost and the value it offers i.e. $1,120. * Target sales and capacity of 18,000 pads in the first year with an investment of $425,000 ($50,000 for the first 250 and $75,000 for additional 250 per month). Return on Investment is 3000%. * Publicize the value it offers to the rental companies as they form a major class of influencers. The revenue loss of rent and asbestos sale for a 10,000 feet job comes out to be $2,183 which is more than covered by the extra 40% margin on sale