Pricing Exercise

Brand: Stay Sharp Ice Skate Sharpener

Description:

Stay Sharp is a device that sharpens blades of ice skates at home. This machine eliminates the need to take skates to a hockey shop to pay for skate sharpening, which costs about $7 each time.

Overview:

There are few sellers of a similar product. Most sharpening machines are for commercial use and would be too expensive for consumers. Market research found that hockey skate owners would be willing to pay anywhere between $139 and $199 for such a machine. Cost of goods sold for Stay Sharp is $84 per unit. Fixed costs for Stay Sharp are $20,000.

Pricing objective:

Stay Sharp has set profit maximization as its pricing objective.

Prepare a Word document that answers the following questions:

1. Based on the information given and pricing objective set, recommend a selling price for the Stay Sharp Ice Skate Sharpener.
2. Explain how you arrived at the recommended price.
3. Calculate how many units Stay Sharp must sell to break even using the recommended selling price and cost information in the overview. Show the formula and answer.