Question

Mrs. Smith had stopped by one day and asked for a price on some cabinets. Snell studied the plan and figured cost would be:

Lumber $ 600

Finishing materials 75

Labor 640

Overhead 384

Total $1,699

With markup of 15%, the price would be $1,954.

Mrs. Smith was incensed stating that a competitor down the street, Mr. Haness, quoted a price of $1,600. It is true that Snell does not want to lay off workers during slow times. What recommendation would you make? Why? AN EXECUTIVE SUMMARY IS REQUIRED FOR THIS PROBLEM.

Answer 1

According to me competitor is always a good teacher, everyday we learn something from them.

Following step requires

check the quality of his products, if his product quality is same as your product then find out the reason behind making that product at such lower price because you need to know how he is able to make it at lower price and try to make it lower than the competitor price.

If the quality of his product is inferior quality then create value for your product because some people buy product at higher value because of its brand and they are ready to pay premium price also.