Atlantic Computer: A Bundle of Pricing Options
1. What price should Jowers charge DayTraderJournal.com for the Atlantic Bundle (i.e., Tronn servers + PESA software tool)?
Server need: Web servers to host the company's new website
Top 3 Requirements:
1. Minimize the acquisition costs
2. Minimize the possession costs
3. Allow the website to process many information requests
The test results shows that the TONN with PESA will be excellent for web servers (e.g., running websites).
Application tested TONN with PESA TONN without PESA Ratio of Perfomance
High perfomance/ compute intensive Workloads 180 187 98%
Graphics applications 280 281 100%
Enterprise applications 264 254 104%
E-mail applications 341 300 114%
File sharing 812 404 201%
Web servers 2222 542 410%
For the customer DayTraderJournal.com we recommend the value-in-use pricing strategy. Using the Value-in-use pricing method, Atlantic Computers would determine the value that DayTraderJournal.com would realize from the purchase of the product. In this case, it will be the following points:
• Lower acquisition cost - $5900.00 instead of $10800
• Lower possession cost
• High speed processing
• Savings $7800!
The annual cost of electricity and software licensing for each server are smaller. It would then calculate the difference between the two figures and assume a 50-50share of savings.
Option 1 TRONN 1 Server ZINK 4 Servers
Price of TRONN $ 2000 $ 6800
Electricity + software license charges $ 1000 ($250 +$750) $ 4000
Total Price $ 3000 $ 10800
Savings $ 7800
Final Price charged to Customer (price + 50% of savings) $ 5900
Jowers should charge DayTraderJournal.com $ 5900 for Atlantic Bundle.
2. Think broadly about the top-line revenue implications from each of the four alternative pricing strategies. Approximately how much money over the next three years will be “left on the table” if the firm were to give away the software tool away for free (i.e., status quo pricing)...