APPENDIX B

New Product Pricing $-$ GreenSense SoilMoist ${?}^{TTM}$

After several years of tinkering with the concept of monitoring water usage, David has

developed a new product that he plans to offer for sale in the spring of $2024.$

GreenSense SoilMoist ${?}^{TM}$ is an integrated soil moisture monitoring and management

system designed to optimize water usage, enhance crop yield, and improve resource

efficiency in agriculture. The system utilizes state$-$of$-$the$-$art sensors$,$ data analytics, and

cloud$-$based software to provide real$-$time insights into soil moisture levels, enabling

farmers to make informed irrigation decisions and manage water resources more

effectively.

David's research has shown him that this is an area of particular concern to farmers and

hobby gardeners with the changes in weather over the past years. This new product

will help farmers know, in real time, changes in the soil moisture and adjust their

watering and fertilizing schedules accordingly. He also wants to ensure that the product

can be priced competitively. The following cost data is available for the $75$ units that

David has produced:

David thinks that GreenSense can be successfully marketed at a price of $$2,500$ for

each unit. GFA's target operating income is $25\%$ of revenue for new product launches.

$He$ is unsure how to determine if the product is going to meet the target operating

income; he knows that the market would probably still purchase the product at $$2,800,$

but after that, demand would fall, since customers are somewhat price sensitive$.$ David

knows he can raise prices once the product is established, and he believes it will grow

in popularity as soon as he can get testimonials and reviews. He is very excited about

this product, because there is nothing like this currently on the market, and he believes

that GFA can achieve first$-$mover advantages by bringing it to market within the next

month.