Question: Paul Bowlin owns and operates a tree removal, pruning, and spraying business in a metropolitan area with a population of approximately 200,000. The business started in 1975 and has grown to the point where Bowline uses one and sometimes two crews, with four or five employees on each crew. Pricing has always been an important tool in gaining business, but Bowfin realizes that there are ways to entice customers other than quoting the lowest price. For example, he provides careful cleanup of branches and leaves, takes out stumps below ground level, and waits until a customer is com-politely satisfied before taking payment. At the same time, he realizes his bids for tree removal jobs must cover his costs. In this industry, Bowline faces intense price competition from operators with more sophisticated wood-processing equipment, such as chip grind-ers. Therefore, he is always Open to suggestions about pricing strategy.
Question 1 What would the nature of this industry sug-gest about the elasticity of demand affecting Bowlen's pricing?
Question 2 What types of costs should Bowline evaluate when he is determining his break-even point?
Question 3 What pricing strategies could Bowline adopt to further his long-term success In this market?
Question 4 How can the high quality of Bowlen's work be used to justify somewhat higher price quotes?