Question

Schimpf Industries Inc. has developed a new grinder, model WC-13, that is designed to offer superior performance to a comparable grinder sold by Schimpf’s main competitor. The competing grinder sells for $82,000 and needs to be replaced after 13,700 hours of use. It also requires $27,400 of preventive maintenance during its useful life. Model WC-13’s performance capabilities are similar to the competing product with two important exceptions—it needs to be replaced only after 54,800 hours of use and it requires $68,500 of preventive maintenance during its useful life.

From a value-based pricing standpoint what range of possible prices should Schimpf consider when setting a price for model WC-13?

Answer 1