Competitiveness both in terms of product and or service quality and pricing can spell the different between a continuously growing business and a stagnant one that is ready for some downsizing. Naturally, businesses who know how to market their product well by setting the prices right and making sure that the customers get the highest value that they deserve in terms of quality are the ones that would most likely thrive. Their market share would naturally be higher compared to companies that offer poor value propositions in terms of pricing and product and or service quality. This principle, in fact, applies to all fields and industries. The objective of this paper is to discuss a proposed financial and funding plan for a biotech company that is engaged in offering 3D Printing Services and 3D Printed Products to its clients. This hypothetical company shall be named Rubberman Corporation. The financial and funding plan will be composed of the pricing plan and strategy, pricing policies, financial plan, contingency plan, and relevant government policies section. Tables and graphs apart from discussions done in paragraph form shall supplement the readers’ understanding of what the leaders and management team members behind Rubberman Corporation are trying to accomplish.
Pricing Plan and Strategy
Rubberman Corporation is a new industry player. This means that the products and services that it is offering are not yet well known in the market. So, in terms of pricing, the company cannot really afford to set the bars high, unless they are specifically targeting those who are in the upper social classes and their products and services were built with premium features and from premium materials that the company simply cannot set the price bars low without operating at a loss. The truth is that if a new entrant to any market be it related to the biotechnology industry or not, is targeting the market segments (of the biotechnology industry) intended for the working and middle social classes, an aggressive pricing strategy must be utilized. Otherwise, the company would just see its product inventories balloon and its warehouses getting filled with unsold merchandises. This is the last thing that a startup company regardless of the field he is operating in would want to see because as newly-established firms, the only way how they can secure their long term growth is by ensuring that the rate by which their products are turned over (i.e. manufactured and sold) is high. This is because a high rate of product turnover means that the company’s production capacity are being used efficiently to generate revenue and after a certain point, profit.
In Rubberman Corporation’s case, they are most likely targeting the low and middle social classes in the biotechnology industry. The type of product that it would offer would be 3D printed biotechnology products such as orthotic and prosthetic devices for patients who have suffered from amputation procedures or those who lost a functional part of their body after a trauma or injury. The company also offers a 3D printing service for orthotic and prosthetic devices for patients who already have a copy of the blueprint of the device that they want to get a 3D remake of.
In general, the pricing strategy and policy that Rubberman Corporation must implement should meet the following criteria:
Meets the company’s financial objectives (i.e. target profit and revenues)
Either meets or beats the price offers of its competitors
Either retains or increases the company’s share in the market
Matches the reputation or image that the company is trying to convey (i.e. premium pricing for a company that wants to convey that its products and services are only for the middle and upper social classes or market segments)
Matches the value and quality offered, and also the market demand (i.e. higher prices for higher value and quality products; higher prices when the demand for the product is high)
And most importantly, the profit margin must meet the rate planned and or forecasted by the company’s management team and board of directors
Financial Plan and Report
The table below summarizes the company’s financial report and performance from the fiscal years 2015-2016 up to 2019-2020.
The following estimated values are based on the following
$24/lb. of 3D printing Powder
Estimated Cost of Acquiring the 3D Printers at $250,000
Risk management is one of the most important processes that an organization’s management team cannot afford to take for granted According to Lewis, “contingency pricing offers firms and businesses an additional pricing option that they can use to drive business; is common in law firms where the client pays fees based on the performance of the attorneys and the amount of money the attorney is able to get or save on their behalf; can be used in other businesses and industries as well” .
A good contingency proposal would be a tiered profit margin setting strategy. With this strategy, Rubberman Corporation would have three or more or less (depending on how many tiers they want) tiers of profit margin setting. The highest profit margin setting would be implemented when the market demand for the company’s products and services is high. It is important to note that a higher profit margin often equates to higher prices .For starters, profit margin is one of the most heavily used accounting measures because it enables the company to gauge the financial health of a business or industry. It is basically the value obtained when the net income of a company or business gets divided by revenues or when the net profit gets divided by sales .
Overall, this serves as one of the most reliable indicator that may be used to check the way how financially sound a business is. In the current contingency planning being proposed, what is being set is the target profit margin. Target profit margins can be attained either by increasing the sales or increasing the price of the products and or services per unit being offered. In Rubberman Corporation’s case, it would reach its target profit margins by increasing or decreasing the prices of its products. Basically, when the prices are lowered, the market’s reaction would be exhibited by a shoot up in the demand for the product and or service being offered by Rubberman Corporation and vice versa when prices are increased. By using this contingency pricing strategy, the company can take advantage of high demand market situations and prevent operating at a loss when market conditions prove to be too challenging to still offer the company’s products and services at a high price .
In case the contingency plans still fail to prevent the company from operating at a loss, an exit plan or strategy would be initiated. Rubberman Corporation’s exit strategy would focus on downsizing its operations, cutting jobs, and focusing more on the most profitable aspects of its business as these are some of the recommended strategies to turnaround a company that is operating at a loss into one that is generating a handsome profit from its operations .
Relevant Government Policies
The government, especially after the ratification of the Affordable Care Act, supports organizations that aim to improve the quality of life and standard of living of patients who have been left either disabled or heavily physically impaired by their medical conditions. The government supports this kind of movement by offering tax breaks, cuts, and incentives, among other newly available incentive mechanisms to support the growth and establishment of such organizations. Rubberman Corporation is one of such organizations. Although it is technically a for profit organization, that feature or characteristic does not set it away from fulfilling its mission and vision, which is to help people who have been physically impaired or left disabled as a result of their physical or medical conditions in the past by offering them different alternatives in light with the available 3D printing technologies of today, that would greatly improve their quality of life and standards of living. One of the model brands that Rubberman Corporation is trying to use as a role model (since it is currently in its startup phase) is Hanger Inc. Hanger Inc. is the prosthetics and orthotics division, a subsidiary, of Hanger Orthopedic Group. It primarily caters to the needs of patients of orthopedic cases by providing them with different orthotic and prosthetic options.
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