Smin Bulders buids 1, 500 -square-foot atarter tract homes in the fast-growing suburbe of Afants Lond and tabor are chesp, and compeition among developers is ferce. The homes are a standard model whth any upgrades added by the buyer after the sale. Smith Bulden' cotts per developed wublet are as follows: (Click the icon to viow the costs) Smith Builders would tke to eam a profit of 14\% of the variable cost of each home sold. 5 milar homes offered by competing bulders seli for $202,000 each. Assume the company has no fixed costs. Reod the requirments. Requirement 1. Which aperoach to pricing should 8 m th Bulders emphasize? Why? Simth Aluilders wili need to emphasize in approach to pricing because they are This mans Smith will control over pricing bocause the tract hemes are stif competion Requirement 2. Wa smeh Eyilders be able to achieve is target proft lewels? Begin by calculating the target cost Oiven the current maket price and Imiths curcesit varitie costs, the camgany wih The comparys prefs wel the target by to achieve its desired proft. Per home sale. Data table ve its desire Iders could 00 per home Should the Requirement 3. Hahrooms and watchens are typicaly the most important seling features of a home. Smith Bulders could differentiate the hemes by upgrading the bathrooms and kitchens. The upgrodes would eost $24,000 per heme but would enable Smith Bulders io increase the salbs prices by 542,000 per hame. GCichen and battrocen upgrades typically add about 175% of their cost th the value of any home, If Smith Buidors mukes the upgrades, what wil the new cost-plus price per home be? Should the company dfferentate is product in this manner? Brould the compary drerentate fs product in this maviner? The rese cosi plis prise per homs, wath bath and witchen upgades, is actualy The expected market pnce of an upgraded house If Smith can sol the upgraded henns for $:44,000. as expeched, th wat sarn Nis desired orofit Smith upgrade the bateooms and kechens se that he has coritrol over pricing