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Atlantic Computers: Case Analysis

CASE ANALYSIS: ATLANTIC COMPUTERS-A BUNDLE OF PRICING OPTIONS SUBMITTED BY: KRITIKA JAIN PG20112055 Atlantic computers are the largest manufacturer of servers and other high tech products with a 20% market revenue share in the segment. The company plans to launch a basic server TRONN and software PESA due to growth in demand for basic servers. Important Details * competitor: ONTARIO ZINK * CAGR: 3%(BS segment) * TRONN along with PESA works FOUR times more efficiently. Value of 2 TRONNs = Value of 4 ZINKs Four types of pricing strategies: * Competition based pricing * Cost plus pricing * Charging only for TRON * Value in use pricing RECOMMENDATION: The company should adopt COST PLUS PRICING with a price of $2245. 5 because: * Charging for PESA would increase its value and act as a key feature * Although revenues will not be the highest, but the possibility is that the customers might not be willing to pay a very high price as in case of value in use. It has a 30% margin which means that the company will surely make 30% profit CALCULATING PRICE IN EACH MODEL(* all calculations done based on assumptions and figures given in case) MARKET SHARE | 2001| 2002| 2003| Total| Basic server| 50000| 70000| 92000| 212000| Market share| 4%| 9%| 14%| | Share | 2000| 6300| 12880| 21180| 1. Competition based pricing Price for 2 TRONN = 2 * $2000 = $4000 Price for 4 ZINK = 4 * $1700 = $6800 Acc to competition based pricing, Price for 2 TRONN= $6800 Price for 1 TRONN= $ 3400 . Charging only for TRONN Price for 1 TRONN= $2000 3. Cost Plus Pricing total market share for 3 years= 21180 volume of market share with PESA (50%)= 10590 R&D costs = $2000000 Per unit cost of PESA= $2000000/10590 = $189 Add margin 30%=189+30% = 245. 5 Total price per unit of TRONN&PESA= $2000+245. 5= $2245. 5 4. Value in use pricing Savings to CONSUMER (per unit) On cost of TRON against ZINK= $1400 Cost of labour = $2000 Cost of Licensing = $750 Electricity = $250 Total price = $4400

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