Chasin Industries Inc.has developed a new robot,model JB-32,that is designed to offer superior performance to a comparable robot sold by Chasin's main competitor.The competing robot sells for $11,000 and needs to be replaced after 1,000 hours of use.It also requires $1,000 of preventive maintenance during its useful life.Model JB-32's performance capabilities are similar to the competing product with two important exceptions-it needs to be replaced only after 2,000 hours of use and it requires $1,000 of preventive maintenance during its useful life. From a value-based pricing standpoint what is the reference value that Chasin should consider when pricing model JB-32?
A) $11,000
B) $12,000
C) $22,000
D) $13,000

Question

Quizplus · Accepted Answer

The reference value is the price of the competing alternative, which is $11,000.