Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(3) EmployeeTracker (Price Discrimination Problem) (15 points) Your hot new startup has just created a software package that will track a rm's employees day and

image text in transcribedimage text in transcribed

image text in transcribedimage text in transcribed
(3) EmployeeTracker (Price Discrimination Problem) (15 points) Your hot new startup has just created a software package that will track a rm's employees day and night to determine how hard they are working (sounds creepy to me). As the marketing director, you must decide on the pricing of the new software. Your research has given you estimates for the potential demand for EmployeeTracker. You believe that there are essentially two market segments Tough Bosses (one million customers) and Cheap Bosses (two million customers). Tough Bosses would be willing to pay up to $8,000 and Cheap Bosses up to $2,000 for the full version of the software. A substantially scaled down version of the software would be worth $1,000 to Cheap Bosses and is worthless to Tough Bosses. It is equally costly to sell any version. In fact, other than the costs for initial development, production COStS are zero. (a) What are the optimal prices that you would charge for each version of the software? Suppose that, instead of the scaleddown version, your startup could sell a different intermediate version that is valued at $4,000 by Tough Bosses and $1,500 by Cheap Bosses. (b) What are the optimal prices in this new situation for each version of the software? Is the rm better off by selling this new intermediate version instead of the original scaleddown version

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

E Marketing

Authors: Raymond Frost

7th Edition INTERNATIONAL EDITION

0132953443, 978-0132953443

More Books

Students also viewed these Economics questions

Question

Always show respect for the other person or persons.

Answered: 1 week ago