Before launch, the firm conducted a number of informal surveys that directly elicited the willingness-to-buy of 1,000 subjects intercepted in shopping malls across the US. Each subject was first given a demonstration of the phone device itself. In addition to the demonstration, each subject was allowed several minutes to watch the different types of content on the device. Afterwards, each subject was told the current price of the device bundled with a 1-year service subscription (i.e. total price for one year). Subjects were then asked whether or not they would buy the device with the one-year service subscription at that price. The specific price was drawn at random, with a 50% chance of being $400 or $275. For the 500 subjects shown $400, 20% said they would buy. For the 500 subjects shown $275, 30% said they would buy.

Q1: Based on the survey results, recommend a percentage mark-up for the subscription pricing. Please show your work. (hint: you do not need to know costs).

Q2:What concerns, if any, do you have with this survey and its ability to provide meaningful information for the pricing of the subscription plan? Explain.