Clear Water Technologies

Clear Water Technologies

The Prices suggested by the different departments do not work.

The various departments suggest following approaches to price the product.

1. To maintain the margin in the upgrade. This is a very vague approach. Even though it maintains the margins but when we take a closer look at the price it will just cost us $8,000 extra to upgrade from 10 to 30 sets that is we get 30 seats in $16,000 which is $1,250 lesser when compared to $17,250 of 30 seat price. If we follow this approach we will lose customer who need 30 seats initially. They would prefer going for the 10 seats initially and upgrade it later to save $1,250.

2. To charge the customer the difference between the setups .This approach will discourage the customer to buy the extra capacity in advance as they will get it when they require it at the same cost.

3. To take as much money as possible. This approach will drive away the customers in the initial phase only to our competitors because they would easily be able to realize that the acquisition cost and usage cost associated with the product is very high so it would be better to pay more initially cost rather than facing very high switching cost in later stages. Also as they will be purchasing only a code which is an intangible thing would make customers feel it to be very highly priced and ultimately upset the customers.

All these suggestions of the prices do not meet the requirements of the pricing strategy.

The final price should accomplish the following:

1. Should not be lower than the current price

2. Should be such that it encourages the customer to buy the 30 seat at the very first time.

3. Should not be very high which would upset the customer.

I think they should follow the approach of “Value –based pricing strategy" to finalize the cost.

In the increasing competition, the upgrade feature available to increase the capacity is providing a point of differentiation to QTX. I think they should try...