Question

AeroScuba is a firm that specializes in outfitting divers with swim fins that are used for swimming under water.  Its customers include both snorkeling and scuba divers.  AeroScuba’s products are recognized as of very high quality, an important factor to serious divers who naturally are concerned about safety as well as performance.  The company’s top-shelf flipper is sold direct to divers for the price of $70.

AeroScuba has patented a new style of flipper that they wish to introduce to the market.  The new product is unusual, not so much in the design, which resembles a traditional webbed-style flipper, but in its construction material.  The new flipper is created using nano-particles.  As the flippers are kicked in the water, the nano-particles attach to the oxygen component of water molecules.  

Just like the way  the dimples of a golf ball capture pockets of air, which allow the golf ball to fly further than if it were perfectly smooth, the pockets of oxygen captured by the flippers allows superior performance in the water.  In tests, swimmers using the nano-flipper could swim about 8 percent faster than swimmers wearing a traditional flipper, and it took less effort to swim so less oxygen was used up while swimming with them.  As a consequence, divers could stay underwater about one-fifth longer on their oxygen tank.  

The typical cost to a consumer of buying all the equipment needed to dive in fairly cold water is close to $2000. This includes not just the flippers, but the mask, wet suit, oxygen tanks, and oxygen regulator.  Filling up a 95-minute tank of oxygen typically costs $55.

The president of the company has approached you, a marketing consultant, to help set the price at which the new nano-flipper flipper should be brought to the market.  He has revealed that because of an updated manufacturing approach, the new flipper costs just $35 to produce (the production cost of the $70 flipper is $45).  

At what price do you sell the split-flipper direct to consumers?  Be sure to explain why the price you recommended is better than other prices.  Start your answer with the price.

Answer 1