Weakly Industrial Products Inc.has developed a new industrial instrument,model CT-60,that is designed to offer superior performance to a comparable instrument sold by Weakly's main competitor.The competing instrument sells for $22,000 and needs to be replaced after 1,000 hours of use.It also requires $4,000 of preventive maintenance during its useful life.Model CT-60's performance capabilities are similar to the competing instrument with two important exceptions-it needs to be replaced only after 2,000 hours of use and it requires $6,000 of preventive maintenance during its useful life.
Required:
From a value-based pricing standpoint:
a.What is the reference value that Weakly should consider when pricing model CT-60?
b.What is the differentiation value offered by model CT-60 relative to the competitor's instrument for each 2,000 hours of usage?
c.What is model CT-60's economic value to the customer over its 2,000 hour life?
d.What range of possible prices should Weakly consider when setting a price for model CT-60?

Question

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The Answer of Weakly Industrial Products Inc.has developed a new industrial instrument,model CT-60,that is designed to offer superior performance to a comparable instrument sold by Weakly's main competitor.The competing instrument sells for $22,000 and needs to be replaced after 1,000 hours of use.It also requires $4,000 of preventive maintenance during its useful life.Model CT-60's performance capabilities are similar to the competing instrument with two important exceptions-it needs to be replaced only after 2,000 hours of use and it requires $6,000 of preventive maintenance during its useful life.
Required:
From a value-based pricing standpoint:
a.What is the reference value that Weakly should consider when pricing model CT-60?
b.What is the differentiation value offered by model CT-60 relative to the competitor's instrument for each 2,000 hours of usage?
c.What is model CT-60's economic value to the customer over its 2,000 hour life?
d.What range of possible prices should Weakly consider when setting a price for model CT-60?