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The decision to still offer the software application for free is based on the risk incurred by the alternative. To better explain, the industry has implemented the strategy of free software for decades and the customers have grown accustomed to it. Therefore, it is rather unlikely for them to purchase products which require expensive software to run faster. In this order of ideas, the most suitable strategy would be that of maintaining the current status-quo.
However, when looking at the issue globally, maintaining the status-quo may not be the best decision at this time. The company should charge for both server and software application as to increases sales revenues. Also, since the company would charge for the PESA, the R&D and product teams would be more determined to increase their efforts in improving the quality of both server and software.
Despite the pro arguments, the decision to also charge for the software application could still generate customer dissatisfactions as a result of the increased retail price. In response to this situation, the product manager could argue the benefits of a cost-plus pricing strategy. This would have to be based on more actual calculi, but should retrieve...
In other words, clients who purchase the new Atlantic server with its additional software application would be able to complete their tasks faster, more efficiently and at superior qualities. They would also be able to register cost reductions as the necessity for more servers would decrease and due to the increased efficiency of the Atlantic Bundle, the costs with used electricity would also decrease.
For this strategy to succeed however, Jason Jowers has to convince the traditional managers to approach the pricing matter from an innovative standpoint and try to appeal to customers in a different manner. This new approach would be based on the idea that the company is the helper of the customer, providing him with not only the products and services he needs, but also with additional and complementary products and services which allow him to better achieve his goals. This strategy has another benefit in that it is not pegged to the competition.
Reference:
Bharadwaj, N., Gordon, J.B., May 28, 2007, Atlantic Computers: A Bundle of Pricing Options, Harvard Business School Publishing
Reference:
Bharadwaj, N., Gordon, J.B., May 28, 2007, Atlantic Computers: A Bundle of Pricing Options, Harvard Business School Publishing
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