Pricing questions: Aside from a home security systems, the company is planning to sell Auto Alarm. They will sell Auto Alarm as solo or as a combo…

Pricing questions:
Aside from a home security systems, the company is planning to sell Auto Alarm.
They will sell Auto Alarm as solo or as a combo with the home security system.
the goal is to achieve the same contribution margin as the home security systems.
The company would like to know how much they should charge for Auto Alarm.
The monitoring of the auto alarm service will be outsourced. The company estimates that
the auto alarm’s incremental monitoring cost will be $12 per customer per month. The $12 per
month monitoring cost would be consistent regardless of whether Auto Alarm were sold
as a solo or a combo with home security services.
The device will cost $30.
The reprogramming cost is $12.50 (all device will have to be reprogrammed)
Home Security system Sales Info:
In 2015
Unit Sold 150
Monitoring sales $29,700
System material 33,750
Alarm monitoring 4,455
Installation 7,000
In 2016
Unit sold 325
Monitoring sales $123,750
System material 74,750
Alarm monitoring 21,038
Installation 16,000
System material cost is $230 per system in fiscal 2016; it was $225 in fiscal
Installation is $100 per system

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