In recent years, offices, industrial workstations and even homes have adopted the use of Air purifiers for the ventilation systems. Hence, there is a high demand for these particular product and the company can fully take advantage of the product’s demand to increase its market share by producing more affordable products for its clients. In order to achieve this, the firm ought to consider the market enhancement to facilitate the preference of the products and increasing the supply.
The firm will lay emphasis on the manufacture and trade of air filters for instance HVAC systems that comprise of a heating, ventilation and an air conditioning unit. The systems include an air filtration as well as a cleaning aspect. The use of air sifters is considered to be a significant necessity in many new buildings. The separation from the atmosphere has generously diminished the air conversion scale between the internal and external parts of the structure, which profoundly affected the accumulation of toxins inside the structures (Moreno et., al 1323). Air sifters may help mitigate such issues by initiating various frameworks to trap the enclosed air toxins, therefore increasing the quality levels of air circulated. Subsequently, the interest for these kind of products has continued to grow and it is normal that it will keep on expanding in the coming years.
Pricing and Cost Estimates
I was able to develop the potential rates assessment as a result of a good cost behaviour analysis. According to Agarwal, the rates estimation will assist in developing an appraising methodology for the new product (849). The table below indicates the cost estimates and pricing for the production of the proposed air sifters.
|Rate Estimations for Air Purifiers|
|Elements||Cost of each unit($)|
|Total Cost(Each Unit)||$26|
The price estimation for each unit is $26. The above rates include the cost of production of the air sifters, the workforce the overhead expenses as well as various forms of fixed costs for instance machinery. Considering the total cost of production is roughly is $26, the cost unit of each unit ought to be set above the approximated $26 tag in order to reimburse the cost of manufacture. As a result, the price recommendation would be between the range $35 to a maximum of $38 to provide an opportunity for the clients and the firm to agree on a price that is affordable. The firm will gain a good profit margin while also considering clients in terms of being to afford the product.
The company opts to employ a various strategies in order to increase its profitability. The strategies include increasing the levels of production in addition to decreasing the cost of manufacturing. With an increase in manufacturing, the firm will be able to discuss ways of having the suppliers materials can lower the input cost by a minimum of $3 per unit as well as a reduction in the overhead costs by a minimum of $2. The overall production costs are therefore expected to be lower from a margin of $26 to $21. The company will in the end enjoy huge profit margins as a result of the price reductions and increase in supply and increasing the level of supply of the new product. The market share is projected to grow at a rate of 5.5% each year to 2020.
Agarwal, A., & Kickhöfer, B. (2018). The correlation of externalities in marginal cost pricing: lessons learned from a real-world case study. Transportation, 45(3), 849-873
Moreno, T., Reche, C., Minguillón, M. C., Capdevila, M., de Miguel, E., & Querol, X. (2017). The effect of ventilation protocols on airborne particulate matter in subway systems. Science of the Total Environment, 584, 1317-1323