Suppose your marketing department does a survey of potential users and finds tha

Question

Suppose your marketing department does a survey of potential users and finds that these users place the following values on the two versions of your software: Software Version Home Users Commercial Users Full-featured version $175 $225 Disabled version $150 $200 If the numbers of home and commercial users are equal, and you cannot distinguish between commercial and home users, what is the most profitable pricing strategy? Assume the MC of production is zero. Show how you arrive at your answer for each of the following scenarios. a. Sell to only commercial users b. Sell to only home users c. Sell to both groups using a single price d. Sell to both groups at two different prices (assume you can distinguish users in this scenario). Suppose your marketing department does a survey of potential users and finds that these users place the following values on the two versions of your software: Software Version Home Users Commercial Users Full-featured version $175 $225 Disabled version $150 $200 If the numbers of home and commercial users are equal, and you cannot distinguish between commercial and home users, what is the most profitable pricing strategy? Assume the MC of production is zero. Show how you arrive at your answer for each of the following scenarios. a. Sell to only commercial users b. Sell to only home users c. Sell to both groups using a single price d. Sell to both groups at two different prices (assume you can distinguish users in this scenario). Suppose your marketing department does a survey of potential users and finds that these users place the following values on the two versions of your software: Software Version Home Users Commercial Users Full-featured version $175 $225 Disabled version $150 $200 If the numbers of home and commercial users are equal, and you cannot distinguish between commercial and home users, what is the most profitable pricing strategy? Assume the MC of production is zero. Show how you arrive at your answer for each of the following scenarios. a. Sell to only commercial users b. Sell to only home users c. Sell to both groups using a single price d. Sell to both groups at two different prices (assume you can distinguish users in this scenario).

Explanation / Answer

d. Sell to both groups at two different prices (assume you can distinguish users in this scenario).

This will be more profitable as firm can charge higher prices from commercial users.

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