Advice about how to price hackoff

Assignment Help Marketing Management

Reference no: EM133649420

Existing virus-protection programs rely on virus databases that constantly need to be updated as new viruses emerge. A typical virus-protection site license costs $3,000 ?per year for sites of less than 350 ?machines and must be updated regularly. Regular updating of the databases costs around $60 ?per computer per year. Furthermore, even with regular updating of the databases, there is a possibility that unaccounted viruses will infect a company's computer systems. Virus-protection experts estimate that with current virus protection software, the probability that a company will experience one complete system breakdown because of a virus within one year is 8%. ??Of the 8% ?of companies that experience a system breakdown, 25% ?also experience a second breakdown sometime thereafter. The probability of more than two breakdowns is virtually zero.

A complete system breakdown, which typically lasts one day, would cost $35,000 ?to a retail company with 175 ?machines and $90,000 (in profits from lost sales) ?to a typical financial services company with the same number of machines.

McBug Software Inc. is about to introduce new virus-protection software called HackOff. HackOff is based on a "mutating-virus-simulator" (MVS), ?which according to McBug is going to revolutionize the virus-protection landscape. The MVS essentially eliminates the need to update virus databases continually. Moreover, the MVS is extremely powerful and, as a result, increases the probability of detecting infected files. Researchers at McBug estimate that companies equipped with HackOff have only a 1% ?probability of experiencing a virus-caused complete system breakdown within a year and a zero probability of experiencing more than one of such breakdowns.

While the price of a HackOff site license remains to be set, it is estimated that clients who adopt the software would incur start-up costs (excluding the site license) ?of $35 ?per machine in installation, configuration, training, etc.

Assuming no other costs of virus infection or software, calculate the economic value of HackOff over the course of one year:

Question 1. ?for a retail company with 175 ?machines running under existing virus-protection software.

Question 2. ?for a typical financial services company with 175 ?machines running under existing virus-protection software.

Question 3. ?McBug's CEO wants your advice about how to price HackOff. What do you recommend the CEO do? (Your recommendation must include a suggestion about pricing and a brief justification.)

Reference no: EM133649420

Questions Cloud

Impact of television advertising on children : limited research conducted in this area within the African context. In relation to the above information assess marketing communications in Africa

What are the main categories of insurance in the us : What are the main categories of insurance in the U.S.? Who pays for the various types of insurance? Is health insurance necessary?

Why do so many mexicans with indigenous heritage and culture : Why do so many Mexicans (and other Latin Americans) with indigenous heritage and culture, not identify as Indigenous, according to Bonfil Batalla and Anahuac?

What stage of the marketing plan is jackie engaged in : What stage of the marketing plan is Jackie engaged in? Performing a situational analysis Implementing marketing mix and resources

Advice about how to price hackoff : What do you recommend the CEO do and ?for a typical financial services company with 175 ?machines running under existing virus-protection software

What are the proper ways to enter a workplace : What are the proper ways to enter a workplace? Far too often, people have no idea how to behave in the workplace.

Discuss how you will implement respect for diversity : Discuss how you will implement Respect for diversity, Sustainability and a principle of your choice within a high-quality early childhood education.

What is your target segment : What is your target segment? What research would you do to ensure your advertisement would resonate with the target market?

How many tablets must the nurse administer : The physician orders Doxazosin mesylate 12 milligrams once daily at bedtime. How many tablets must the nurse administer?

User Account

All Pages