Suppose a company, Re-Tire, has come out with a new approach to solve the problems of punctures. Its new wheel, which is made of steel, allows rubber "tread segments" of tire tread to be bolted directly to the wheel (see image; tire not actual size). No air is required, so the tire can’t go flat, and if one of the segments becomes damaged, the operator using basic hand tools can merely replace the segment without removing the wheel and dismounting and reinstalling the reparied tire. With an ordinary tire, the wheel has to be removed and the tire dismounted at a shop using special tools. The benefit is that the operator can be back to work almost immediately.Assume Re-Tire has a patent on the technology to create the wheel and tread segments, which requires extensive computer simulation in the design of the tread segments. Assume as well that because the technology for creating the rubber segments is less complex than that for air-filled tires, the cost of production for Re-Tire is approximately 20% lower than for regular tires. The steel wheels for the segments are roughly equivalent in cost to those used for regular air-filled tires (the wheels are not interchangeable). Around the world there are about 800,000 skid steer loaders in operation in various industries, and 90% of them use one of just two tire sizes. The replacement tire market for the loaders is over $700 million per year. What price should Re-Tire set for its combination wheel/tread segment product? Assume the standard wheel/air tire combination is $250.

Throughout my personal view, the cost including its combination wheel/tread sequence good or service should be set at $200 for Re-Tire. As the conventional wheel/air gear combined effect is $250 as well as the level of manufacture besides Re-Tire is about 20% lower than those for frequent tires.
The profit of such a 20% reduction costs should be managed to pass forward with employees to gain the start promoting including the latest design and technical method that used produce such tires, and several other costs associated with that as well.
The value proposition and perhaps even the accessibility added benefit will surely make clients consider buying but also setting up such tires, and also becoming frequent or long-term buyers of Re-Tire.