Modular Machine Tools: Bundling and Pricing Strategies under by Nils Tönshoff

By Nils Tönshoff

German computer instrument brands are more and more faced with problems in gaining aggressive benefits by means of providing hugely custom-made items. yet worthy fee savings may be got by means of making use of a modularization method that explicitly considers consumers' necessities already within the module layout level. Nils Tönshoff offers a brand new framework of the computer software development and promoting approach that bills for optimized cross-functional determination making in module layout, laptop device production and product advertising and marketing. The tradeoff among customization and standardization is balanced via a package pricing procedure in accordance with a modular product constitution. The analytic device built by means of the writer has been confirmed by way of an incredible German computing device instrument manufacturer.

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Additional resources for Modular Machine Tools: Bundling and Pricing Strategies under Demand Uncertainty

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Therefore, almost no machine tool can be sold more than a few times. Also, machine tool manufacturers face a very volatile demand due to the fact that they are positioned at the end of the supply chain, for example, see Alexander [1990]. We will therefore treat customers as individuals facing uncertain demand for their own products. In order to hedge against this demand uncertainty customers are willing to purchase machine tool functionality despite of a lack of immediate need for it. This functionality "banking" or "hedging" can be utilized by the machine tool manufacturer through bundling modules to machines.

These are for example the costs for certain types of machinery that are used to manufacture a module, the costs for the design personnel or overhead costs for production planning (cf. 1). An interesting question is whether the design costs for functions are strictly super-, strictly sub- or strictly additive. Superadditive design costs means that integrating functions into one module costs more than designing a module for each function individually. Explanations for this to occur are that the time necessary to design such modules increases overproportionally with the number of functions considered, because the module becomes very complex.

By this, customers who do not increase profits can be discriminated against. The bundling results in a modular machine tool line; modules are combined to machine tools according to customers' needs and profit maximizing prices are charged for the machines. The bundling strategy aims at three different goals that are increasing the value of the machines for the customers and the profit gained from selling these machines. 6. 1 Cast Reductions Cast reductions are achieved in a number of different ways.

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