This paper answers questions about a business case involving a new product from Pecos Printers in Texas, a small company producing color printers for small businesses. These printers provide the features desired by small business owners and meet the lower price expectations of these customers as well. The case involves the pricing decision and how it is made.
From the Paper:
"The decision rule made by Paul Pecos is based on his knowledge first of what the printer costs to manufacture and second on the markup he deems necessary to make manufacture worthwhile. He has determined that the cost of the printer has to be kept low enough so that the markup at retail will not go too high to allow the product to remain competitive. The article from the Los Angeles Times notes the general requirements for a printer for a small business, which this printer does fulfill, and the price levels for such machines, which this product clearly meets. Paul Pecos's analysis has produced the rule that the cut-off for sales should be $300. Anything above that should be accepted, and anything below that should be rejected. As a general rule, this defines the business and sets a clear standard that sales people can follow."
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