Tom is comparing two printers for his small business. The purchase price for Printer A is $1,000, with maintenance and operationscosts of $400. Printer B is more expensive, with a $1,500 purchase price. Printer B increases productivity by $100, and reduces the maintenance and operations costs by half. The expected lifetime value is one year. What is the economic value to the customer (EVC) of Printer B?

The Economic Value to the Customer (EVC) is the idea that a customer will buy a product only if its value (which is not necessarily reflected in its price) is greater than the value of the next-best alternative. To find this value, we must follow these steps:

1. Identify the value elements to the customer.

According to the problem statement, the option we must evaluate is Printer B, which has two value elements: it increases productivity and reduces maintenance and operation costs.

2. Assign a monetary value to each element and find the "total additional value".

Productivity is increased by $100, and operation and maintenance costs are reduced by half. That is to say that if printer A has costs of $ 400, printer B has costs of $200, therefore the savings generated to the customer is also $200 (400-200).

The "total additional value" is the sum of the two previous values, that is, $300.

3. Determine the purchase price for the next-best alternative.

The other alternative is Printer A, whose price is $1000.

4. Determine the EVC.

The EVC is the sum of the total additional value and the purchase price for the next-best alternative. In this case, we have: $ 300 + $ 1000 = $ 1,300