Pricing Strategy Assignment 2 of 2

Order Description
In this assignment, you will complete another key section of your marketing plan:

Write a 1 page recommendation for the pricing strategy necessary to successfully market your health care product or service (Intrathecal Pain Pump). Be sure to include an estimate of the costs associated with the product or service, and the profits that are expected with the recommended pricing.

You will need to make some �educated estimates� to complete this assignment; please follow a format like this to demonstrate that your recommended pricing will result in profits:

New Product Per Unit 20,000 units
(1st year sales forecast)
Suggested retail price $100.00 $2,000,000
Cost to retailer ** $50.00 $1,000,000
Retailer margin $50.00 $1,000,000
Cost of Goods Sold
Components/raw materials $10.00 $200,000
Labor $10.00 $200,000
Overhead $5.00 $100,000
Marketing costs $7.00 $140,000
Manufacturer profit $18.00 $360,000

** �Cost to retailer� is the same as Manufacturer�s sales revenue

New Service Per Day 200 days per year
(1st year sales forecast)
Service Charges** $250.00 $500,000
Cost of Goods Sold
Labor $100.00 $200,000
Materials $20.00 $40,000
Overhead $30.00 $60,000
Marketing costs $10.00 $20,000
Service provider profit $90.00 $180,000

** Service Charge is the expected sales revenue from the new service

As a starting point to estimating costs, visit Bplans and search for a sample plan in a similar line of business to the one you are proposing. Look for the �Pro Forma Profit and Loss� chart within the Financial Plan section of the business plan, and make note of the expected costs in relation to forecasted sales. You can also do an Internet search for �income statement � (insert your product or service here)� and review the samples that you find.

Within this section draft, please demonstrate your grasp of the marketing terminology and concepts related to pricing strategy. For example, it would be appropriate to identify whether you have chosen a penetration, skimming, or followership price strategy, and why you believe that strategy is appropriate.


7 points = completeness of content
3 points = appropriate use of marketing terminology and concepts
5 points = utilization of Level 2 writing guidelines