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Jindal Global Business School

O.P. Jindal Global University
(Institute of Eminence by the Ministry of Education, Government of India)
Sonipat, Haryana

Pricing Strategies

A report submitted in completion for the company EmpowerEd

Submitted to: Prof. Chinmoy Bandyopadhyay

(Date: 10th May 2024)

By: Akshat Agarwal

Utkarsh Kishore

Sara Garg

Mahee Hegde

Tejas Gaba
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Contents
Introduction...........................................................................................................................................3
1.Understanding the product................................................................................................................4
2. Market Analysis.................................................................................................................................7
3.Cost Analysis.....................................................................................................................................12
4.Setting the Pricing Objectives...........................................................................................................14
5. Strategy development.....................................................................................................................15
6.Pricing structure...............................................................................................................................17
7.Key performance indicators..............................................................................................................19
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Introduction

The educational sector has been undergoing a large-scale transformation from the past few
years. The covid 19 pandemic has played a huge role in the shift of focus of education from
the offline mode to the online mode. Most of the activities now are conducted virtually and
the entire world is becoming more and more tech savvy as the time progresses calling for
continuous innovative ways to promote education. This makes the education sector a one
with huge potential and very high growth prospects
Virtual reality is an innovative technology that has been on the rise and can play a crucial role
in helping transform the in-class experience for most of the students. Through this report, we
aim to examine the impact VR can create on the classroom experience through a thorough
understanding of the product. We will then be looking at the market for the product, analysing
the costs that are associated with the product, how we would set the prices, strategy
development in relation to pricing and key performance indicators in the various sections that
are to be discussed later as we progress in this report.
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1.Understanding the product

In this section of the report, we will be trying to understand the features, benefits and
advantages of using VR educational software by schools as a tool for education.
a) Features: The VR educational software that we will be providing to schools consists
of several features that have been listed below:

 Interactive Experience: Through the use of VR educational software, the

learning experience can be made very much interesting for the students as it
would require their active involvement with elements, they enjoy being
incorporated into curriculum such as taking them on virtual reality tours of the
solar system, the forts and mountains, demonstrating to high school student’s
real lab dissections etc. The software would focus on providing hands-on
experience to the students.

 Complete course: In our software, we will include the complete courses for
the students. By this, we would be including various projects, assessments,
quizzes and other tools that are used to test the students as well. This would
make the job of the teachers a bit easier and would also assist the students in
the form of additional revision of the concepts.

 Data analytics and reports: The software we will provide will be collecting
data about the student's engagement, areas of interest, weaker sections of the
student that would provide the students and the teachers with valuable insights
as to where the student requires improvement and what is his strong point.

 Enhanced Storage capacity: With our software, we will be looking to

provide maximum storage capacity to inculcate the maximum number of
curriculums, tests and other things possible to ensure greater learning for
students

 Charging: We will be using 250-watt high speed chargers for the VR headsets
that we will be providing so that they can be ready for use within a short
period of time if the device runs out of charge because of some
miscommunication or a glitch.

 Broad range of subjects: Our software would be offering a very broad range
of subjects covering all the courses that are taught in school. Also, we would
be making a constant effort to keep the curriculum aligned to the learning
objectives of all the subjects that we are offering.

b) Benefits: The use of VR software by schools for the education purpose would have
several benefits as listed below:

 Visualization: The students through the use of VR would be able to better

visualize the concepts that are being taught to them. Through this, they would
be able to better remember the concepts because they would be provided with
a real-world experience of how things would look, feel or sound rather.
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 Gamification: The VR software can incorporate various fun activities and

games into the learning curriculum for the students which would lead to
greater interest and student engagement thereby contributing to a better
learning experience.

 Ease of use: The VR headsets we are providing are made as light as possible
and the headbands of the headset can be adjusted according to the preferences
of the students making the device comfortable for use by students of all age
groups.

 Customized learning: The VR educational software that we are providing has

features that allow the customization of the teaching approach as per the
capabilities and grasping ability of the students making it an interesting
proposition

c) Drawbacks: Though the use of technology is likely to bring about many positive
changes in the education industry, it is likely to have certain drawbacks such as:

 Costs: VR headsets and the software required to operate these devices usually
are costly and cannot be afforded by all the schools that are existing in the
world today

 Limited access: Students who have certain kind of medical disabilities or

problems might not be able to use the VR device and software as it may harm
their health

 Addictive: The students might get addicted to this and pay no attention to the
traditional methods of learning which are equally important. Moreover, they
might use this device for excessive gaming purposes as well

 Technical difficulties: The setting up and maintenance of VR devices and

software is a difficult task and requires trained professionals and engineers to
do it which becomes a problem for the company supplying this product
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Differentiation

 When we look at how our product is different from our competitors, we offer a
wide range of subjects, and the curriculum is assigned very closely to the
learning objectives of the course.
 We also keep on adding additional subjects to the software that has been
purchased by the institution to help the students stay updated with the real
world.
 Also, our products are the lightest in the market enhancing the usability of the
products as compared to those of the competitors thus making our product
different from what is available in the market.
 Our headsets weigh around 400 grams which is very light when compared to
other VR devices.
 Our fast-charging headset is also rare in the market as people nowadays desire
all the processes associated with the usage of the product to be quick.

2. Market Analysis
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Target Customers:
· School administrators
· IT administrators
· Curriculum directors & teachers
· Parents
· Students

Customer profile:

School administrators:

Demographics: The age vary according to the levels of educational background and also
professional experience that is 35-60.

Purchasing behaviour:
· Budget constraints: seek cost-effective options and will justify expenditures.
· Long term investments: they look for solutions which has long term benefit with it.
· Value Oriented: they do not compromise with the quality as they opt for software
aligned with educational goals & requirements.
· Research Oriented: product dummies, its reviews, research is all conducted through
evaluations.

Sensitivity to price changes:

 Negotiation: To maximize budget allocation they ask for discounts, bulk pricing etc.

 Roi consideration- They evaluate ROI based on improved student engagement &
academics outcome.

Curriculum directors & teachers:

Demographics: Here age varies based on the levels of experience in teaching and curriculum
development, range typically 25-60.

Purchasing behaviour:
 Curriculum Alignment: Look for software that complements and improves the
current curriculum.

 Preference: Seek solutions that may be easily adjusted to accommodate various

teaching methods and academic disciplines.

 Software Testing and comments: they are interested in participating in trial versions
of software to evaluate its performance before making a purchase.

Sensitivity to price changes:

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 Allocating resources- by prioritizing educational resources based on perceived value & the
impact on student learning.

 Value proposition- affordability of a software with relation to its capability to leverage

effectiveness of learning & student engagement.

IT administrators:

Demographics: Individuals of age between 25-50, having a background in IT related fields.

Purchasing behaviour:
 User experience: Creating value by engaging & having experiences that are
interactive to enhance learning.

 Accessible platforms: Software that are compatible and accessible both in and out of
the classroom should be given preference.

Sensitivity to price changes:

 Cost of ownership- when evaluating prices of software, one must consider long term
cost which includes upgrades, maintenance and support.

 Cost saving measures- solutions which are cost effective & meet the organisations
technological needs without endangering service or quality.

Parents:

Demographics: 25-60, with diverse socioeconomic backgrounds.

Purchasing behaviour:

 Safety & privacy- parents are concerned about their child’s safety & security online
and thus look for software that has high security measures.

 Educational value- they make sure that the software chosen aligns and meets the
needs of their child’s learning & academic goals.

Sensitivity to price changes:

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 Value for money- software that offer educational benefit with are tangible in nature
for children at affordable price.

 Investment in education- investing in software that supports academic success and

learnings as well as assure its value & effectiveness.

Students:

Demographics: 5-18, they have high tech familiarity as they are growing up and thus having
lot of exposure to technology.

Purchasing behaviour:

 Peer influence- word of mouth recommendations influence each other’s choices &
preferences.

 Exploration- platforms that offers opportunity for creativity, personalisation &

exploration are considered more attractive by them.

Sensitivity to price changes:

 Free or low-cost alternatives- they generally prefer software that provides

educational benefits at affordable price or at no cost.

 Value perception- ability to enhance learning experience & academic performance

are certain parameters based on which they evaluate the value of software.

Competitor analysis
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When we talk about virtual reality the market is currently lead by two major players:

1. Oculus (meta): They are quite famous in the VR headsets market, but they aren’t a
direct threat to our product because their primary focus is towards the gaming virtual
reality which has a different target customer, and our focus is towards the use of our
headsets and technology in the education sector.

2. Class VR: Class VR is our major competitor, and they have the same target market as
ours. They have positioned themselves as a leader in the market and have made VR
education more reachable and more appealing for schools, they have targeted the k-12
schools, there main aims are to-

 Provide a platform that is easy to use, and it integrates VR into the already existing
curriculums.
 They have also offered a curated content of premium quality, VR experiences aligned
across various subjects.
 They have made a simple software which can be easily used and operated by
educators from varying technical backgrounds.

As Class VR hasn’t disclosed the prices they are offering publicly, so it’s hard to find
what is the exact pricing strategy that they are using.
.
Below is a table which shows more information about our competitors:

Demand analysis:
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Demand estimation: We have estimated our demand based on certain factors, if 0.5% of the
schools adapt with our technology that will be 7500 schools in India and if we assume that
each school serves 500 students on an average so that would mean-

Demand= Number of schools adopting VR * no. of students per school,

7500*500= 37,50,000

So that could imply that our demand in the initial year would be 3.75 million students.

Factors affecting the demand: -

· Market Size: First, we will have to identify the schools and other educational
institutions that have already adopted or are planning to adopt VR technology in the
coming future. This will give us an idea how big this market is.

· Growth Trends: This is an important factor as we need to check at what pace is the
adoption of VR technology growing and what new hardware and software
developments are coming, and demand will also increase if the benefits of immersive
learning experiences increase.

· Economic Indicators: Some external economic indicators could also impact the
demand of VR educational software, such as the budget of schools, the funding
allocated towards development of technological initiatives. Also, the government
initiatives and grants could also have a major impact on demand of the VR software
in schools.

· Competitive Landscape: If we work taking into consideration our pricing strategies,

product differentiation, and customer satisfaction that will have a positive impact on
our product’s demand. If we try to evaluate our competitor's performance and fill in
the void that they have left that will also help our products demand to grow.

· Regulatory Environment: There are also some other major regulatory factors that
could affect the demand of our product as the users will have some concerns about
date privacy, educational standards and compliance requirements. We must make sure
that our software follows all the relevant regulations and help us increase our demand
among schools.
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3.Cost Analysis
In this section, we will be looking to identify the costs that are associated with manufacturing
the VR headsets and the costs associated with the software that we are providing. We will
also be trying to calculate the break-even point for the company to determine minimum
number of units we need to sell.
Cost structure: The main costs that are associated with any product include the fixed costs
as well as variable costs that are associated with the manufacturing of the product. A detailed
breakdown of the costs associated is listed below:
a) Fixed Costs: The fixed costs refer to the costs that do not change over a period for certain
number of products to be manufactured. These are to be incurred irrespective of whether the
company is earning profits or not. The fixed costs that are associated with our VR headsets
and the software are
 Hardware costs: The company would incur costs to produce the VR headsets as well
as the controllers of the system.

 Software costs: The company would have to incur the initial costs that are associated
with designing the core of the educational platform which include aspects of the user
experience, programming and backend infrastructure.

 Customer service costs: The product is technical in nature and requires constant
assistance from the supplier of the product which is why companies need to provide
ongoing technical support to schools, various other clients who are using the product.

b) Variable costs: The variable costs refer to the costs that can change subject to certain
conditions in relation to a product. These are not fixed and keep changing as per the output
that the company is able to produce. The variable costs that can be associated with the VR
headset and educational software for schools include:

 Content costs: If the company decides to procure the content for a few specialized
courses from third party vendors, it incurs a cost for this which keeps changing
because the company is charged according to the number of usable hours available or
the extent of content that the course can cover.

 Employee costs: The company must hire certain number of employees to

manufacture the VR headset devices. This is variable because there can be employees
leaving and joining the organization and the learning curve effect can come into play
over here. The company also must hire professional software developers who would
help them in developing courses aligned to the curriculum.

 Transaction fees: The supplier might have to incur some percentage of the total sales
price of the headsets and the software as transaction fees to process the payments of
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the institutions and various target customers. The transactions would be of high value
requiring a trusted and secure online gateway thus causing the company to incur
transaction costs.

 Additional courses cost: The company might have to add some additional courses or
a few topics to the already existing modules that it has offered on a few occasions.
However, this does not happen always and thus it can be considered as a variable cost
for the company.
Break-even analysis: The break-even point for a company would be reached when the
revenues it is able to generate is equal to the costs incurred by the company to produce the
product. The basic proposition of the break-even point is that the company is in a state of no
profit / no loss. The break-even point provides the company with an approximate figure of the
number of units they need to sell to cover all the costs and just survive in the market.
The company sells a few versions of its product. In this section we will be analysing the
break-even point of its most premium version where it sells the headset and the subscription
plan. We also look at the break-even if the company sells only its subscription plan to the
consumers. The pictures attached below show a detailed breakup of the calculations done to
achieve the break-even point for the sale of the software only and along with it the headsets.
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4.Setting the Pricing Objectives

We’ve identified two main objectives that we would like for the price of EmpowerEd’s
subscriptions to achieve:
a) Maximize Profit
As there are only a few competitors in the edtech VR space, we want to maximize our profits.
A value-based pricing model would be appropriate in this scenario. The model allows for
pricing the product according to its perceived value to the customer, which in our case due to
our highly specialized courses, technology, software, headset specifications etc. means that
we can set a relatively higher price, which would result in higher profit margins.
b) Build a Premium, Innovative Brand Image
Empower Ed is a highly specialized, innovative software, and we would like our brand image
to reflect this.
A premium pricing strategy would be appropriate to achieve this objective. Other than brand
identity elements like the logo, physique, interface, headset aesthetics, positioning statement
etc., the price can play an important role in furthering this objective. We would set a high
price for the product to reflect its premium quality and the brand’s tech-forw
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5. Strategy development
a) Price elasticity consideration
Price elasticity of demand refers to the degree to which the demand for a product changes
with a change in the price.
We considered the following factors when coming to a decision about whether this market
was price elastic or inelastic:
i) Perceived Value
Our product offers many rich benefits to its users such as enhanced learning, visualization,
immersive experience etc., and customers would be willing to pay a high price for our
software due to these benefits. This points to inelasticity of demand, where the demand is not
affected by the increase in price.
ii) Competitive Landscape/Availability of Substitutes
There are only 2 primary competitors to EmpowerEd, as mentioned previously, which means
less competition and more potential market share. Customers also do not compare prices as
much with only a few competitors and are less likely to purchase a software with a lower
price. Again, this points to inelasticity, because customers’ demand doesn’t change.
iii) Customer Segment
Different consumer segments within this industry may have varying levels of price elasticity.
For example, our target market-being private schools in Tier 1 and Tier 2 cities- may be
inelastic compared to public schools in Tier 2 cities, whose demand may be more elastic. This
refers to how certain customer segments cannot afford such a premium product may be more
price elastic.
Since our primary target is schools in Tier 1 cities, we know that customer willingness to pay
is high, making the demand inelastic.
iv) Economic conditions
Things like recessions, downturns and the general economic atmosphere can influence price
sensitivity and elasticity. According to a comment from the RBI Governor Shaktikanta Das,
India’s growth may have slowed, but it doesn’t appear to be heading towards a recession in
the next few years. We can safely assume that we would have an inflow of customers who are
willing to pay a high price for a premium product like EmpowerEd, which means that
demand is largely inelastic.
After considering the above factors, we concluded that demand would remain inelastic for a
product like EmpowerEd.
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b) Selecting a pricing model

From the pricing objectives, we identified that we could use either Value-Based pricing or a
Premium pricing strategy to price our products.
We think Value-Based pricing would be the suitable option:

i) Captures Customer Value

A value-based pricing model allows us to capture the value we provide to our customers
through our product. EmpowerEd offers a full library of courses, an immersive experience,
lightweight headsets, enhanced storage, fast charging, etc. Pricing based on the value of all
these benefits makes sure that we are not underselling our subscriptions.

ii) Reflects Differentiation

As mentioned previously, EmpowerEd constantly adds new courses to remain updated. The
headsets are the lightest in the market, and enhance usability, and the fast charging feature
makes our product more efficient. These unique differentiators must be reflected in the price
of the subscriptions and headsets, and a value-based model ensures that it is taken care of.
Schools would also be willing to pay a premium for EmpowerEd because of the pbvious
superiority.

iii) Aligns with Customer Perceptions

Schools are like to perceive the value of EmpowerEd and our subscriptions and headsets
based on the various benefits we provide with our products. Value-based pricing can help
justify a higher price to the customers by aligning with these perceptions.

iv) Maximizes Revenue

With clients willing to pay a premium for an innovative, technologically superior product like
EmpowerEd, so with the right price that reflects the value provided, EmpowerEd can increase
profitability.

v) Flexible Pricing

Value-based pricing allows us to have more flexibility in pricing our tiered software
subscriptions and headsets to reflect the value that each of them provides. We can also adjust
the price based on specific needs and budgets if need be and expand our customer base.

Value-based pricing enables EmpowerEd to quantify our unique value propositions.

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6.Pricing structure
In this section, we examine what various models the company will sell and also determine
the pricing models of the company.
The company will be selling two types of headsets in bundles of 30 headsets each which are
listed as follows:
1. Basic headset: This will be a basic VR headset that has 32 GB of storage and has all
the other necessary required features and specifications required for a VR headset to
operate. This basic headset is not compatible with the most premium software
subscription plan of the company. This will be priced at $14000 per bundle

2. Premium headset: This is the premium headset being offered by the company with a
storage of 128 GB. This headset also has a mobile charging port along with it. It is
compatible with all the software subscriptions being offered by the company. This
headset is designed in such a premium way that it is extremely light-weight and still
has all the features. This is priced at $18500 per bundle.
The company will be offering three types of subscription plans which are listed as follows:
1. Basic plan: This plan includes access to VR experiences across 7-8 subjects that are
suitable for introductory explanation. It also consists of the basic classroom
management tools that are required to conduct the VR sessions. These are low-cost
plans and are priced at $500 per year.

2. Medium plan: This plan includes access to VR experiences across 12-14 subjects and
has difficulty levels that are higher than what is available in the basic plan. It consists
of certain advanced classroom management tools such as quizzes, assessments,
monitoring student progress and also has interactive experiences for a few basic
concepts. It also brings along with it a teacher resource portal. This plan is priced at
$700 per year.

3. Advanced Plan: This plan includes access to VR experiences across 25+ subjects and
consists of tasks ranging from easy to difficult. It consists of all the classroom
management tools and has immersive and interactive experiences for all the activities.
The plan also consists of an advanced data analytics algorithm which provides the
student as well as the teacher with valuable insights. It also has certain videos related
to teacher training on the use of VR. It enjoys priority in customer service across all
the problems it has been facing. It is priced at $1100 per year
Through this, we as a company look to follow the tiered pricing structure where we look to
cater to the demands of the schools who do not want to go for the premium plans
straightaway and want to try out the device first.
The company also plans to offer discounts of 10-15% during the start of the new academic
years as schools have new admissions which increases the number of students and they are
looking to revamp their education process year after year.
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Adjustment strategy:
 In case of a situation where we need to adjust prices in response to the market
changes, we will reduce the prices of the software solutions as well as the VR device
prices.
 As a company, we will also be ensuring to regulate the production of the goods as per
the requirement of the schools.
 To counter the market challenges and competition, we will ensure that significant
amount of marketing and promotion is done by the brand to not lose presence in the
market.
 Also, we will focus on providing value to the customers and ensure they are provided
with quality service so that we are able to maintain an image of a consumer centric
and valuable and trusted brand.
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7.Key performance indicators

The Key performance indicators basically refer to those indicators that are used to measure
the effectiveness of a company and how efficiently it has been able to operate in the market
and make money through selling its services. The essential key performance indicators in this
case would be:
1. Number of schools to whom the device was sold: This is a very important metric
because the market is a newly emerging one and as a brand we need to ensure that we
can cater to the maximum number of schools that are present in the market to gain a
market share and further on build brand loyalty.

2. Premium devices and plans sold: We will keep a close look on how many premium
plans and devices we are able to sell for the company because these are the ones that
yield the highest profits and are the most effective.

3. Customer satisfaction ratings: We as a brand will conduct various surveys with

regards to our products and after sales service to assess the satisfaction level of our
consumers and make subsequent improvements to them if required.

4. Profits: The overall profitability of the company will also be looked at because it is
essential for survival in the market.
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