Clearwater Case Essay

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Clearwater Technologies Case Study Analysis Nehal Shah, Marina Koroleva, Slavko Kupcevic 1. Executive Summary This case is about deciding the pricing strategy for the 10–seat and 20-seat upgrades to the QTX product line at Clearwater Technologies. To start with, Clearwater Technologies Inc., founded by four MIT graduates, is a small, publicly traded technology firm building Customer Relationship Management (CRM) servers for sales staffs of small-sized to medium-sized companies. The company customizes QTX product line that holds 70% of its mature market share. QTX allows multiple users to maintain their sales account databases covering contact information, quote histories, copies of all communications, and links to the customer's corporate database for shipping records. QTX products are sold through value-added resellers (VARs), who provide a complete sales and support solution to the end users. Clearwater sets the manufacturer’s suggested retail price (MSRP) and sells the QTX products to VAR’s at 50% off the MSRP. The basic QTX package provides simultaneous service access for 10 users to the system, i.e. 10 “seats”. Originally, the product line was comprised of 10-seat, 20-seat, and 30-seat capacity QTX servers. However, after thorough analysis of the product line Clearwater Technologies decided to manufacture and install only the 30-seat server, even if the buyer requested a 10-seat server. They would ship the 30-seat servers but only enable 10-seats for the buyer providing the feature to upgrade to additional 10- and 20-seats. Clearwater was aware that the customers were unlikely to change brands since switching costs were higher than upgrading to additional seats from Clearwater. At a meeting on Monday, May 2004, Rob Erickson, QTX product manager; Hillary Hanson, Financial Analyst; and Brian James, Sales Manager; were going to present their pricing

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