We can look at following 4-pricing strategy options considering that client daytradejournal.com is looking for minimizing acquisition cost, minimizing possession cost and allow their website to process many information request - a. Status Quo Pricing: Tronn server will be priced at $2000 and PESA software will be given for free Implications - i. Problem with this strategy is Tronn will be perceived as a sever same as that of Zink from the Ontario and so product differentiation will take a hitii. Jowers will be compromising the investment done on the PESA development ($20,00,000) which will eventually shoot the number of servers needs to be sold to achieve break evenb. Competition pricing: Tronn will be priced against competition product based on the savings it will brought to the customers Implications i. As per Matzers conservative statement regarding efficiency of Tronn server, this server when bundled with PESA can perform 2 times faster than existing Zink server from the competitors. That means:Tronn CostZink Cost1 Tronn = 2 ZinkTronn price

$2000$17001700*2 = 3400$3400

ii. There will be additional cost for PESAiii. This will make Atlantic bundle hugely priced product and will not appeal its consumersc. Cost plus pricing: Tronn will be priced as per market growth of 36%, also making an assumption that Atlantic sells all the units producedi. Calculations:Year200120022003Total

Market Requirement (in units)500007000092000

Atlantic's Market share2000630012880

PESA bundle (50%)10003150644010590

R&D cost for PESA (in $)2000000

PESA cost per unit (in $)188.86

Mark up cost @30% (A)245.51

Tronn cost per server (in $)1538

Mark up cost @30% (in $) (B)1999.40

Total Cost bundled with PESA (in $) (A+B)2244.91

ii. Cost of 1 Zink server is $1214iii. With this costing cost of Tronn will be way high than that of Zinc

d. Value in use pricing: Tronn will be priced such that part of clients savings (value in use) will be passed on to the Atlantic computersi. Calculations: assuming that Jowers goes by conservative approachCosts1 Atlantic Bundle2 Zinc Server

Price20003400

Electricity250250

License 750750

Total Cost30004400

Savings1400

50% of Savings700

Final Price (server price + 50% of savings)2700

ii. This costing so far looks lucrative majorly for following reasons:1. This way if sales increase Atlantic will have increase in the revenue2. Atlantics sales force can convey the value to the customer3. Atlantic will save in getting into price wars with Ontario4. Atlantic can actually promote Tronn server as a same price Zink server and have balance price for the PESA

I recommend Value in Use pricing for daytraderjournal.come. MatzerReaction: PESA should be given free and this pricing is not only putting additional price for PESA but also relying a lot on performance of the bundle to support the price. Resolution: i. Matzer needs to be understood the whole value preposition given to the customer and the fact that Atlantic is not virtually not charging for the PESA rather its taking its share from the long term benefit Atlantic Bundle is providing its customersii. This way we are putting some logic in the market for the pricing instead having random mark-up profit margins.

b. Cadena & SalesforceReaction: With increased price it will be difficult to position the product in such sales driven dynamic market Resolution: i. Sales team has to convey value and savings this bundle is bringing to the clientii. Long term benefits has to be communicated like number of servers purchased will be down 4x which will eventually have savings in terms of overheadsiii. Given that customers will catch on perceived benefits this product has it can earn more incentive for the sales per unit sold (looking at higher price)iv. Sales people can use PESA as a selling tool to accelerate the servers performance

c. Sr. Management at Atlantic:Reaction: Management will resist such steep increase in the price also traditional approach will hinder relying so much on the software tool accelerating the hardware performanceResolution:i. If we dont believe in the tool we have developed who will?ii. We have to get the benefit of being the pioneer in developing the software that elevates performance of the hardwared. Customers:Reaction: Why is this price hike? Are you saying that your product is so superior?Resolution:i. This bundle has been made to perform 4x faster than that of any server in the category that means you save on a. Multiple purchasesb. Electricityc. Licensesd. And any other overhead on your part to take care of number of servers you possesii. The promise is coming from industrys veteran organization which has given you top notch products in the pastiii. We will ensure after sales is excellente. Ontario Zinks Sr. ManagementReaction: Firstly they will reduce their servers price. Second reaction we can expect is Ontarios will also come up with similar software but it will take its time for R&DResolution:i. Atlantic doesnt have to get into the price wars, in fact news about Zinks price getting reduced can be used by Atlantics sales force in their favor.ii. If at all Ontario does comes with their software Atlantic would have captured sizable amount of market, also later Atlantic can give PESA for free to their regular or bulk buying customers PricingPriceUnit sales per yearTotal revenueTotal Cost*Profit

200120022003

100031506440

Status Quo2000 2,000,000 6,300,000 12,880,000 21,180,000 16,287,420 4,892,580

Competitive3400 3,400,000 10,710,000 21,896,000 36,006,000 16,287,420 19,718,580

Cost plus2245 2,245,000 7,071,750 14,457,800 23,774,550 16,287,420 7,487,130

Value in use2700 2,700,000 8,505,000 17,388,000 28,593,000 16,287,420 12,305,580

Cost200120022003*Total cost

100031506440

1538 1,538,000 4,844,700 9,904,720 16,287,420