Customer value-in-use pricing and total cost

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Reference no: EM131116644

A chemical plant uses 200 O-rings to seal valves for carrying corrosive materials. Those O-rings cost $5.00 each and must be changed during regular maintenance every two months. Suppose the equipment must be shut down each time the O-rings are changed, and the cost of a shutdown is $5,000. A new product has twice the corrosive resisting power of the current O-rings. What is the maximum the seller of the new O-rings could charge the customers so that the customers see value in switching to the new O-rings from the one they currently use? [This problem highlights two concepts: Customer Value-in-Use Pricing and Total Cost]

Reference no: EM131116644

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