Submitted by: Submitted by iarunp
Views: 10
Words: 379
Pages: 2
Category: Business and Industry
Date Submitted: 07/07/2015 02:26 PM
Define the selling price and price strategy
Total Unit Expense = 18000 + 0.1 * 18000 = 19800
Minimum Selling Price (15% markup) = 19800 * 1.15 = 22770
Selling Price = 42000
Price Strategy: To maximize unit sales, To create a perception of brand quality or exclusiveness.
The market share of hydraulic elevators for low-rise buildings is very high. By setting the price of Monospace at 42000, we will maximize unit sales. (There is 50% additional cost for machine room setup). Monospace elevators use less electricity than hydraulic elevators. This price will be good even for existing low-rise buildings to move to Monospace.
Also, by setting a price higher than the hydraulic elevators a perception of brand quality is also maintained.
Break even if fixed cost is 3 million
Break Even(Q) = Fixed Cost / (Unit Price - Unit Cost)
= 136 units
Minimum Sales to Satisfy 15% margin
Total Cost = (Fixed Cost + N * unit cost)
Total Revenue = N * unit price
Total Revenue = 1.15 * Total Cost
N = 1.15 * Fixed Cost / (Unit Price - 1.15 * unit cost)
N = 180 units
List of information required for the estimation of demand
New Buildings that would require elevators
Old Buildings that would need replacement of elevators.
Preference to Energy efficiency.
Preference towards MRL elevators. (Machine roomless)
Demand Forecasting method
Market Research (Qualitative Forecasting Method) can be used to estimate the demand. Market surveys and interviews can be conducted to estimate the demand.
Elevator buying process and overall buying behavior
The elevator buying decision varies with the type and design of the building. Complex elevator systems are required for taller, costlier and complex buildings. The number of people involved in the decision making process also increases with the complexity of the building. The people involved in the decision...