Microfridge

This figure is the demand curve shows the students’ probable purchasing ratio at alternative price.

Elasticity of demand is measured by dividing the percentage change of the quantity demanded by the percentage change of the price. 

If the price goes down just a little, they'll buy a lot more. If prices rise just a bit, they'll stop buying as much and wait for prices to return to normal. 

This is the demanding curve. From this figure, we could see that Ed = (△Q/Q)/(△P/P) =((90-52)/52)/((50-75) /75)= -2.19, |Ed| is larger than 1.

It means that consumers are really sensitive to price changes. In this condition, the market was highly price sensitive and a low price stimulates market growth. So it could set price by market-penetration pricing.

Bennett hoped to earn a return of 15% on the selling price.

1. If he set the price according to Sanyo’s landed price, then the price could be $309.
2. If he set the price based on the school’s revenue, then the price could be:

90% students used hot plates and other hazardous appliances.

Like the concept of the MicroFridge and would pay extra to have one.

Like or very likely

52%——$75/year

90%——$50/year        

7 years

For each unit, the school could receive $75*7=$525, $50*7=$350

If the school earned a margin of 30% on this revenue, then the retail price should be:

$525*(1-30)=$367.5, $350*(1-30)=$245

1. If he set the price based on the motel’s revenue, then the price could be:

Super 8 Motel

$3/room——most of them said they would like to have a MicroFridge unit in the room.

3 years, we assume the occupancy days=180

For each unit: $3*180*3=$1620                 $3*180*7=$3780

If the hotel earned a margin of 30% on this revenue, then the retail price should be:

           $1620*(1-30)=$1134              $3780*(1-30)=$2646

For these three ways, both the landed price and school price were much reasonable.