Price
FOB prices will be set with three objectives in mind:
- The price will be right in order to penetrate the market
- The price should always cover the costs of production
- The price should allow for profitability
Product cost will not vary greatly with size of package, since the form-fill-seal machinery has maximum speed regardless of size. Thus, price will decrease with volume of production. We estimate that the experience curve effect will allow a decrease of cost of 20% when sales volume doubles.
Allowing for 15% profit before taxes, the FOB price will be:
| 12,000/day | 24,000/day | |
| 8 oz packet | $0.93 | $0.83 |
| 4 oz packet | $0.83 | $0.66 |
FOB price will be adjusted every week in order to take into account daily variations in the price of the raw material (raw materials account for 20% of product cost).
Lyons & Coyne, Inc. pricing policy will be flexible enough to maintain market position once competition arrives. This will be done by providing for better quality and extra features without necessitating dramatic price reductions which may jeopardize "positioning" as a high quality product.
Market Selection and Roll-Out for Salad Ready Products
Other Tasks and Overall Coordination
Critical Risks: Company Response
