McDermott Company developed a new industrial component called IC-75 that offers...
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Accounting
McDermott Company developed a new industrial component called IC that offers superior performance relative to the comparable component sold by McDermotts primary competitor. The competing part sells for $ and needs to be replaced after hours of use. It also requires $ of preventive maintenance during its useful life.
The ICs performance capabilities are similar to its competing product with two important exceptionsit needs to be replaced after hours of use and it requires $ of preventive maintenance during its useful life.
Required:
From a valuebased pricing standpoint:
What is the reference value McDermott should consider when pricing IC
What is the differentiation value offered by IC relative the competitors offering for each hours of usage?
What is ICs economic value to the customer over its hour life?
What range of possible prices should McDermott consider when setting a price for IC
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