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Atlantic Computer: A Bundle of Pricing Options Argumentative Essay Sample

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Atlantic Computer: A Bundle of Pricing Options Argumentative Essay Sample

The Atlantic Computer case is one in which we are asked to suggest a price for the Tronn servers and PESA software tool, specifically for the exemplary customer, DayTraderJournal.com. In order to make any decisions we must remember that any strategy we use shows the added benefits of the software, is easy to explain, and is a competitive pricing strategy. The first decision that needed to be made was whether the PESA software tool should be sold separately or it should be given away with the server. Through a pros and cons analysis, I decided that it is more beneficial for the company to sell the software separately, which allows us to eliminate the status quo strategy. (Refer to Appendix A) Indeed this would create some obstacles for the sales team, as they would have to push the value propositions of the software. As the head of the server department stated, “the key …[to] success is going to be our ability to sell the server with our new software tool.” Thus whatever price strategy is used it was must show the value of the PESA software, and how it allows the server to perform up to four times faster. The other criteria that comes into question now is the fact that the strategy that is finally picked must be easy to sell.

The benefits must be obvious and the price needs to be competitive. Through the case we know that the Zink sells for approximately $1,700, and our current is only $300 more. However, if we follow the competition based pricing, $3,400, it would be difficult to show consumers the added benefits, as the price is comparatively so high. Furthermore the value use pricing is difficult to explain to the consumer, as many may be weary that they will end up paying extra for something that in practicality wont provide them the savings that are proposed. Thus even though it does result in higher revenue it isn’t a viable solution. It could be argued that the sales team can attempt to show that possession costs are low, however our exemplary consumer also wants to minimize acquisition costs. Therefore we can eliminate the competition based pricing and value in use pricing strategy.

Finally we are left with the cost plus pricing strategy, which gives a price of $2,866.50. This is the most optimal solution as this method is easy to explain to the consumer, it allows the company to show the added benefits of the software and it is a competitive price strategy. Furthermore as the customer profile shows, this target market wants to first minimize acquisition costs and then minimize the possession costs, both of which go hand in hand. When trying to make the sells our employees should ensure that they discuss the added benefits of the software, in terms of both the decrease of acquisition costs and the possession costs. In terms qualitative reasons, I feel that this method allows the company to transfer partial costs of development to the consumer. Furthermore as the breakeven analysis shows, it is reasonable to achieve 1505 sales. (Refer to Appendix B) In conclusion the best pricing strategy is the cost plus strategy.

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