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Mr Prashant Mishra

In: Business and Management

Submitted By bvpprashant
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Chestnut pricing
Having completed a market assessment study and also a risk assessment study the Management of Chestnut Ridge wanted to take a relook at the pricing strategy of the country club. The annual fees due to the country club from existing members currently stood at $2000 per annum.
The Management wanted to carry out a consumer based pricing analysis from potential customers so as to check if they needed to charge a different pricing level from new applicants.
Proposed consumer based pricing approach.
The price scale, which Chestnut Ridge wanted to use had three basic elements : (1) Beginning price level (2) Price interval, and (3) Ending price
The price scale :
-------------------------------------------------
$.1500
-------------------------------------------------
$.1750
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$.2000
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$.2250
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$.2500
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$.2750
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$.3000
-------------------------------------------------
$.3250
-------------------------------------------------
$.3500
-------------------------------------------------
$.3750
-------------------------------------------------
$.4000
-------------------------------------------------
$.4250
-------------------------------------------------
$.4500

The Management assigned two researchers to visit 50 respondents from his target market, the potential customers, hand over to the respondent the price scale and then ask, “At what price on this scale will you begin to feel that this country club is already too expensive so that you will not want to apply for membership anymore”. The price at which the revenue ix maximum is the optimal price.
This is also the price where

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