Kunst 1600 Case Essay

Words: 2419
Pages: 10

Question 1: What are the major, quantifiable value and price elements associated with the Kunst 1600 ?

1. Value elements

* Cost savings from not having to change oil because the Kunst 1600 is an oil-free vacuum pump.

* Higher revenues, and hence profits, due to higher productivity of the Kunst 1600 in lower pressure settings. These higher profits are only generated in the light commercial refrigerator repair segments since in these segments, the technicians can complete more jobs with a faster pump (the Kunst 1600) in comparison to the more traditional pumps.

2. Price elements

According to the respondents in the focus groups, the expected lifetime of their current vacuum pumps is around five years. However, wholesale
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Increased revenues and profits

The higher increased revenues and profits due to a higher efficiency of the Kunst 1600 is only generated in de Light commercial refrigerator repair segments since there are lower pressure levels in which the Kunst 1600 can work more efficiently than other vacuum pumps thus reducing the time of one job by 10 minutes. This enables the technician to perform more jobs than normally and this implies higher revenues and profits. These extra jobs will be performed during the 12 hectic weeks in the summer.

Extra profit per year = (number of extra jobs per week * net profit of one job) * 12 = (2 * $30) * 12 = $720

3. Differences in lifetime and hence prices between Kunst 1600 and traditional pumps

In the two previous sections we discussed the value part of the Kunst 1600. But to reach at a total value-in-use we also need to consider the price of the Kunst 1600 in comparison to the more traditional vacuum pumps. Simply put, the value-in-use is represented by the following equation:

Value-in-use = Value – Price

The value-in-use, so the difference between value and price of the Kunst 1600 is actually the incentive of the customer to buy the Kunst 1600.

The expected lives of the Kunst 1600 and the more traditional vacuum pumps differ, so we can take this into account by using the differential price of the pumps and express this per year. If this differential