Tavis Robotics Corporation has developed a new robot-model FI-73-that has been designed to outperform a competitor's best-selling robot. The competitor's product has a useful life of 10,000 hours of service, has operating costs that average $4.60 per hour, and sells for $109,000. In contrast, model FI-73 has a useful life of 30,000 hours of service and its operating cost is $2.60 per hour. Tavis has not yet established a selling price for model FI-73.
-From a value-based pricing standpoint what is the reference value that Tavis should consider when pricing model FI-73?
A) $155,000
B) $109,000
C) $187,000
D) $327,000

Question

Quizplus · Accepted Answer

The reference value is the price of the competing alternative, which in this case is $109,000.

Tavis Robotics Corporation Has Developed a New Robot-Model FI-73-That Has