McDermott Company has developed a new industrial component called IC$-75.$ The company is excited about IC$-75$ because it offers superior performance relative to the comparable component sold by McDermott$$s primary competitor. The competing part sells for $$1,500$ and needs to be replaced after $2,300$ hours of use. It also requires $$350$ of preventive maintenance during its useful life.

The IC$-75$s performance capabilities are similar to its competing product with two important exceptions$$it needs to be replaced after $4,600$ hours of use and it requires $$450$ of preventive maintenance during its useful life.

Required:

From a value$-$based pricing standpoint:

$1.$ What is the reference value that McDermott should consider when pricing IC$-75?$

$2.$ What is the differentiation value offered by IC$-75$ relative the competitor$$s offering for each $4,600$ hours of usage?

$3.$ What is IC$-75$s economic value to the customer over its $4,600-$hour life?

$4.$ What range of possible prices should McDermott consider when setting a price for IC$-75?$