Mountain Point operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a $14\%$ return on investment on the company's $$183,750,000$ of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. Mountain Point projects fixed costs to be $$33,000,000$ for the ski season. The resort serves about $725,000$ skiers and snowboarders each season. Variable costs are about $$13$ per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices.

Read the requirements.

Requirement $1.$ Would Mountain Point emphasize target pricing or cost$-$plus pricing? Why?

Mountain Point should emphasize a $$ approach to pricing because it has been able to differentiate its ski resort from others in the area. Because of its good reputation, managers will have

$$ control over pricing. Of course, they still need to consider whether the $$ price is within the range customers are willing to pay.

Requirement $2.$ If other resorts in the area charge $$89$ per day, what price should Mountain Point charge?

Complete the following table to calculate the price Mountain Point should charge per lift ticket.

$$

$$

Plus: $$

$$

$$

PI

$$

$$

Divided by: $$

Price per lift ticket $$

$$

Would Mountain Point emphasize target pricing or cost$-$plus pricing? Why?

If other resorts in the area charge $$89$ per day, what price should Mountain Point charge?

Given Mountain Point's favorable reputation, they $$