Group 15

Product
Performanc
e of CMI
Pads after
Product
testing
with
Kendrick
Foundation
Company

Curled Metal Inc.

4 Marketeers

CMI Pads drove piles 33% and lasted for the entire job.
Curled metal set life was 10 times more than conventional pads
20% increase in performance
Temperature rise of the pads was only 250 degree Farenhite compared to
normal pads which rose to 600 degree farenhite.

Six major influences for CMI management

Pile hammer
manufacturers

Key
indicator
points for
CMI
company-

Architectural/co
nsulting
engineers

Soil Consultants

Enginerring
Contractors

Independent
pile driving
contractors

Cushion pads were not great attention in the pile driving industry
and was taken for granted
Pads had become unbranded and were produced by small
anonymous job shops
High profit margins of 30-40% for the distributors, however sold as a
necessity rather than featuring them as work-saving tool.

Pile Hammer
renting

Group 15

Issues
facing CMI
at this
stage

Curled Metal Inc.

Difficult to convince the sales and marketing that there was a market
for the new pads
Difficulty in finding outlets that would give required attention to sell
these products.
As the product became more of a necessity rather than an important
added feature, high prices could not be charged.
No available statistics to evaluated the potential U.S. market for
cushion pads.

Recommen
dations for
CMI
manageme
nt

Due to the diverse selling points of the pads, construction

manufacturers should be targetted who actually value and understand
the quality of the product.
Pricing of the CMI pads should be kept competitive, keeping in mind
that the market is still captured by local and unbranded producers.
Similar tie-ups like the Kendricks Foundation company can be useful
to market their products effectively in the consttruction Industry.

4 Marketeers

Group 15

Curled Metal Inc.

4 Marketeers

PRICING STRATEGY
i.

Cost-plus pricing
Scenario 1: Existing Equipment
111/2 cushion pads
Material
Labor
Total Direct cost (A)
Indirect Fixed cost
Fixed Factory overhead (B)
Total Manufacturing Cost
Direct Cost + Factory
Overhead (A+B)
Scenario 2: With $150000 of permanent tooling
Direct Costs

$46.92
$86.40
$133.32
$311.04
$444.36

111/2 cushion pads

Direct Costs

Indirect Fixed cost

Material

$46.92

Labor

$34.92

Total Direct cost (A)

$81.84

Fixed Factory overhead (B)

$125.70

Total Manufacturing Cost

Direct Cost + Factory

Overhead (A+B)
Expected margin by the company ~ 40-50%
Scenario 1: Selling price = $222.1 ~ $266.64 per pad
Scenario 2: Selling price = $136.4 ~ $163.68 per pad

$207.54

Note: Contribution margin = Product price- variable cost

ii.

Value based pricing

Cost Drivers
Diesel
hammer

Average cost/real
hours
$102

Crane
Leads @
$60/foot

$156

Labor

$132

Overhead
Total
Cost/hour

$300

$24

$714

No of hours saved using CMI set = 20min/set

No of sets required = 50
Total hours = 20*50 = 16.66 hrs/set
Cost/hour = $714/hr
Total cost ~ $11895
Value based price (~20% of cost) = $2378/set
Value based price = $475.68 per pad

Since the product adds a lot of value to the production process in terms
of cost saving and efficiency we can go for value based pricing for the
CMI Pads and it can be charged at $475/ pad.

Group 15

Curled Metal Inc.

4 Marketeers