Pricing and Breakeven Analysis Assignment (Group Case Asignment # 2)

Due at the beginning of class on March 16, 2009

This assignment is based on the Optical Distortion Case

Assignment: Please complete a Pricing analysis and offer a final recommended price for the ODI lens.

At the end of this assignment you need to have a balanced, well analysed and supported recommendation for the price that ODI should charge per lens. You will need to use all three pricing orientations (Cost/Profit, Competitive and Value based) to analyse what pricing options make sense.

You will start by organizing data from the case on the costs involved for ODI. You will break up the costs into Fixed and Variable costs assuming a one year period. You will find that there are several possibilities (depending on what we decide later) for some of the fixed costs. You will evaluate these costs for several (3-5) such scenarios and run the subsequent analysis on all of them. (pl. follow the example in class).

You will then perform Breakeven analysis on these numbers to provide input on pricing options. You will be calculating several breakeven points for different pricing options as well as different fixed cost scenarios (like in the example in class).

You can use other information from the case and pricing of competitors as well as value to the customer to come up with different price possibilities.

You will make projections for actual sales based on trends and projections in the case exhibits.

Finally, you will use the breakeven numbers for the different scenarios as well as the sales projections to decide viable pricing options and choose the best price. Please remember that you have to not only justify the price you choose, but also explain why the pricing options you did not pick are not as good.

Please assume that ODI is launching only in the California market