Ludy Mechanical Corporation Has Developed a New Industrial Grinder-Model YS-48-That

Multiple Choice

Ludy Mechanical Corporation has developed a new industrial grinder-model YS-48-that has been designed to outperform a competitor's best-selling industrial grinder. Model YS-48 has a useful life of 100,000 hours of service and its operating cost is $0.90 per hour. In contrast, the competitor's product has a useful life of 20,000 hours of service and has operating costs that average $1.50 per hour. The competitor's industrial grinder sells for $169,000. Ludy has not yet established a selling price for model YS-48.From a value-based pricing standpoint what is the differentiation value offered by YS-48 relative to the competitor's offering for each 100,000 hours of service?

A) $736,000
B) $60,000
C) $199,000
D) $259,000