Using the results from the Colerick and Fazio tests both time and cost savings were determined, presuming contractors will be renting equipment for each job. The first step in this process involves identifying the Reference Value, which is the price per unit of the next best alternative, i.e. asbestos pads. Reference values for the Colerick and Fazio jobs were $166.40 and $400.80, respectively. Positive Differentiation Values of $219.33 and $639.20 were calculated for the Colerick and Fazio tests, respectively. Neither test proposed any negative value as a result of using CMI's pads. Therefore, the total economic values of CMI's pads were $$385.73 for the Colerick job and $1040.00 for the Fazio job. (For detailed calculations and results of the EVA, please refer to Appendix I). It is critical to set a price and develop a marketing plan that communicates and guarantees the value-adding incentives of CMI's pads while ensuring profitability for CMI. .
Pricing.
Pricing of a product as ground-breaking as CMI's curled metal pads is crucial to its success. If priced to high, sales will be lost to the next best alternative. If priced to low, revenue will be lost and profits will suffer. After evaluating the EVA (See Appendix I) and taking into account the adoption of a new product, we recommend that the new pads be offered at a price of $350 per pad. The cost savings each year would be almost 33% in pads alone (See Appendix III). This alone would persuade manufacturers to switch to CMI's new pads. This savings does not yet take into account the time savings gained through the use of CMI's pads. A full cost benefit analysis conducted on two independent projects showed significant savings. Savings on the Colerick test were equal to over 2.5%, or $1,940, of the total contract amount (See Appendix IV). The test results were equally impressive on the Fazio test: CMI's pads were responsible for saving over $1,723.