Blauvelt Electronics Corporation has developed a new instrument-model GZ-29-that has been designed to outperform a competitor's best-selling instrument. Model GZ-29 has a useful life of 30,000 hours of service and its operating cost is $3.20 per hour.In contrast, the competitor's product has a useful life of 10,000 hours of service and has operating costs that average $5.60 per hour. The competitor's instrument sells for $149,000. Blauvelt has not yet established a selling price for model GZ-29.From a value-based pricing standpoint what range of possible prices should Blauvelt consider when setting a price for GZ-29?
A) $245,000 ≤ Value-based price ≤ $370,000
B) $370,000 ≤ Value-based price ≤ $519,000
C) $149,000 ≤ Value-based price ≤ $519,000
D) $149,000 ≤ Value-based price ≤ $245,000

Question

Quizplus · Accepted Answer

The value-based price should be at least equal to the competitor's price of $149,000 and can go up to the total cost savings and value added by the GZ-29, which is $519,000.

Blauvelt Electronics Corporation Has Developed a New Instrument-Model GZ-29-That Has