McKinsey's Pricing Levels

While elements of each of McKinsey's pricing levels are relevant to our analysis, the Product/Market Strategy Level is the primary pricing level which led our team to price the CMI pads at a list price of $665.98. Pricing of the CMI pads was done relative to that of the competition's Asbestos padsand with respect to the total costs associated with each type of pad. Although the individual list price of Asbestos pads may be less, the significantly lower "actual cost of use" for the CMI pads, along with their superior material, engineering, and competitive strengths, will warrant the $665.98 list price in the eyes of the customer.The suggested list price of $665.98 balances profitmaximization for both CMI and the pile-driving contractors by setting the list price at half of the breakeven price point. This pricing strategy should both encourage the pile-driving contractors to try out a new technology and produce a win-win situation for CMI and its customers. Because not all customers or competitive situations are the same, our team has decided to embrace a wide pocket price band. In considering transaction pricing, our team has decided to offer discounts to the 75% of pile-driving contractors who own their own hammers, at least once crane, and a set of leads. The reason CMI will offer these customers a discount of up to $168.42 for each pad is that: While elements of each of McKinsey's pricing levels are relevant to our analysis, the Product/Market Strategy Level is the primary pricing level which led our team to price the CMI pads at a list price of $665.98. Pricing of the CMI pads was done relative to that of the competition's Asbestos padsand with respect to the total costs associated with each type of pad. Although the individual list price of Asbestos pads may be less, the significantly lower "actual cost of use" for the CMI pads, along with their superior material, engineering, and competitive strengths, will warrant the $665.98 list price in the eyes of the customer.The suggested list price of $665.98 balances profitmaximization for both CMI and the pile-driving contractors by setting the list price at half of the breakeven price point. This pricing strategy should both encourage the pile-driving contractors to try out a new technology and produce a win-win situation for CMI and its customers. Because not all customers or competitive situations are the same, our team has decided to embrace a wide pocket price band. In considering transaction pricing, our team has decided to offer discounts to the 75% of pile-driving contractors who own their own hammers, at least once crane, and a set of leads. The reason CMI will offer these customers a discount of up to $168.42 for each pad is that: