As you are aware, we recently added the EPIX Movie Channels as part of a new tier of programming for our digital video subscribers The EPIX channels are sold as an add on package for $9 75 per month, but we would like to potentially increase our contribution margin from our subscriber base Currently we have 15,059 subscribers, generating monthly revenue $146,823 In an earlier study, our marketing department generated data on sales quantities at various price levels In addition we have included the licensing cost as well as regional expenses Please provide a recommendation of the profit maximizing price, and how much our profits will go up if we adjust price to that recommended level Please not whether this will impact the revenue generated Regression Stats Multiple R 9463 R Squared 8955 Adjusted R Squared 8900 Standard Error 2 6757 Observations 21 df Standard Error t stat P Value Lower 95 Upper 95 Intercept 39 057 2 015 19 383 0 34 840 43 274 Price 2 462 193 12 763 0 2 865 2 058 df ss ms f Significance f Regression 1 1166 15 1166 15 162 88 0 000 Residual 19 136 03 7 16 Total 20 1302 17 Price Number of Subscribers Cost of License Fees Divisional Sales, General and Administrative Costs Total Revenue Total Cost Profit $5 00 29 974 $ 134 883 $ 14 50 149 87 $ 149 38 $ 0 49 $5 50 29 256 $ 131 651 $ 14 50 160 9072 $ 146 15 $ 14 76 $6 00 17 822 $ 80 199 $ 14 50 106 932 $ 94 70 $ 12 23 $6 50 22 657 $ 101 956 $ 14 50 147 2702 $ 116 46 $ 30 81 $7 00 19 897 $ 89 537 $ 14 50 139 2804 $ 104 04 $ 35 24 $7 50 16 671 $ 75 017 $ 14 50 125 0288 $ 89 52 $ 35 51 $8 00 20 492 $ 92 213 $ 14 50 163 9344 $ 106 71 $ 57 22 $8 50 20 000 $ 89 998 $ 14 50 169 997 $ 104 50 $ 65 50 $9 00 19 760 $ 88 920 $ 14 50 177 84 $ 103 42 $ 74 42 $9 50 17 123 $ 77 053 $ 14 50 162 6671 $ 91 55 $ 71 11 $10 00 12 644 $ 56 896 $ 14 50 126 435 $ 71 40 $ 55 04 $10 50 12 785 $ 57 531 $ 14 50 134 2388 $ 72 03 $ 62 21 $11 00 12 216 $ 54 974 $ 14 50 134 3804 $ 69 47 $ 64 91 $11 50 13 246 $ 59 608 $ 14 50 152 3313 $ 74 11 $ 78 22 $12 00 8 637 $ 38 867 $ 14 50 103 6464 $ 53 37 $ 50 28 $12 50 10 595 $ 47 678 $ 14 50 132 4375 $ 62 18 $ 70 26 $13 00 5 857 $ 26 357 $ 14 50 76 1436 $ 40 86 $ 35 29 $13 50 2 615 $ 11 768 $ 14 50 35 30385 $ 26 27 $ 9 04 $14 00 2 739 $ 12 326 $ 14 50 38 346 $ 26 83 $ 11 52 $14 50 5 291 $ 23 809 $ 14 50 76 71878 $ 38 31 $ 38 41 $15 00 3 051 $ 13 730 $ 14 50 45 765 $ 28 23 $ 17 54

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As you are aware, we recently added the EPIX Movie Channels as part of a new tier of programming for our digital video subscribers. The

As you are aware, we recently added the EPIX Movie Channels as part of a new tier of programming for our digital video subscribers. The EPIX channels are sold as an add-on package for $9.75 per month, but we would like to potentially increase our contribution margin from our subscriber base. Currently we have 15,059 subscribers, generating monthly revenue $146,823. In an earlier study, our marketing department generated data on sales quantities at various price levels. In addition we have included the licensing cost as well as regional expenses. Please provide a recommendation of the profit-maximizing price, and how much our profits will go up if we adjust price to that recommended level. Please not whether this will impact the revenue generated.

Regression Stats

Multiple R .9463

R Squared - .8955

Adjusted R Squared - .8900

Standard Error - 2.6757

Observations 21

	df	Standard Error	t stat	P-Value	Lower 95	Upper 95
Intercept	39.057	2.015	19.383	0	34.840	43.274
Price	-2.462	.193	-12.763	0	-2.865	-2.058

	df	ss	ms	f	Significance f
Regression	1	1166.15	1166.15	162.88	0.000
Residual	19	136.03	7.16
Total	20	1302.17

Price	Number of Subscribers	Cost of License Fees	Divisional Sales, General and Administrative Costs	Total Revenue	Total Cost	Profit
$5.00	29.974	$ 134.883	$ 14.50	149.87	$ 149.38	$ 0.49
$5.50	29.256	$ 131.651	$ 14.50	160.9072	$ 146.15	$ 14.76
$6.00	17.822	$ 80.199	$ 14.50	106.932	$ 94.70	$ 12.23
$6.50	22.657	$ 101.956	$ 14.50	147.2702	$ 116.46	$ 30.81
$7.00	19.897	$ 89.537	$ 14.50	139.2804	$ 104.04	$ 35.24
$7.50	16.671	$ 75.017	$ 14.50	125.0288	$ 89.52	$ 35.51
$8.00	20.492	$ 92.213	$ 14.50	163.9344	$ 106.71	$ 57.22
$8.50	20.000	$ 89.998	$ 14.50	169.997	$ 104.50	$ 65.50
$9.00	19.760	$ 88.920	$ 14.50	177.84	$ 103.42	$ 74.42
$9.50	17.123	$ 77.053	$ 14.50	162.6671	$ 91.55	$ 71.11
$10.00	12.644	$ 56.896	$ 14.50	126.435	$ 71.40	$ 55.04
$10.50	12.785	$ 57.531	$ 14.50	134.2388	$ 72.03	$ 62.21
$11.00	12.216	$ 54.974	$ 14.50	134.3804	$ 69.47	$ 64.91
$11.50	13.246	$ 59.608	$ 14.50	152.3313	$ 74.11	$ 78.22
$12.00	8.637	$ 38.867	$ 14.50	103.6464	$ 53.37	$ 50.28
$12.50	10.595	$ 47.678	$ 14.50	132.4375	$ 62.18	$ 70.26
$13.00	5.857	$ 26.357	$ 14.50	76.1436	$ 40.86	$ 35.29
$13.50	2.615	$ 11.768	$ 14.50	35.30385	$ 26.27	$ 9.04
$14.00	2.739	$ 12.326	$ 14.50	38.346	$ 26.83	$ 11.52
$14.50	5.291	$ 23.809	$ 14.50	76.71878	$ 38.31	$ 38.41
$15.00	3.051	$ 13.730	$ 14.50	45.765	$ 28.23	$ 17.54