: Assume there is one customer in each group. Show through calculations that the bundled price of $10.5 generates more revenue (and also more contribution in this case) than unbundled pricing. Specifically, you need to show: what is the optimal price for each of the two phone services if they are priced separately (show each step of calculations)? What is the total revenue if they are priced separately at their respective optimal prices (show each step of calculation)? Why is $10.5 the optimal bundled price among the four bundled prices (show revenue calculation)? How much more revenue is gained by charging $10.5 bundled price, relative to charging the respective optimal price for each of the two services? Note: Need to show every step of your calculation. (8 points)

What is the takeaway message that can be applied to other pricing situations? Particularly, under what circumstances should you consider bundling? (3 points)

Customer Voice Mail Hot Line Group 1 9.0 1.5 Voice Mail + Hot Line 10.5 13.0 2 8.0 5.0 3 4.5 8.5 13.0 4 2.5 9.0 11.5 Customer Voice Mail Hot Line Group 1 9.0 1.5 Voice Mail + Hot Line 10.5 13.0 2 8.0 5.0 3 4.5 8.5 13.0 4 2.5 9.0 11.5