Question
Assume that a company has developed a new industrial component called Part A that offers superior performance relative to its competitors. The competing part sells
Assume that a company has developed a new industrial component called Part A that offers superior performance relative to its competitors. The competing part sells for $1,500 and needs to be replaced after 1,500 hours of use. It also requires $400 of preventive maintenance during its useful life. Part A is similar to its competing product with two important exceptionsit needs to be replaced after 3,000 hours of use and it requires only $200 of preventive maintenance during its useful life. From a value-based pricing standpoint, what range of possible prices should the company consider when setting a price for Part A?
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