Brain and Company is a consulting group that offers pricing and revenue optimization consulting service guaranteed to deliver $3.0M in Benefit to a customer. It costs Brian and Company $700,000 to provide this service. However, they have a competitor, Dissenture, that provides a similar service that delivers only $1.5 M in guaranteed benefit, but it costs Dissenture $500,000 to provide this service.

Brain wants to use its ROI advantage and charge the customer more than its cost. Therefore, it wants to find out what is the maximum it can charge the customer and still win the bid.

Hint: Assume the price the consultants offer to the customer is variable, say B and D. Set up the inequality relationship as

The maximum B/D ratio that ensures Brain has higher ROI is 2.0

Part A:

Brain knows that Dissenture will not charge below its own cost. Knowing that fact, what is the maximum price it can offer to the customer that guarantees it will win the contract?

$525,000

$666,000

$1,000,000

$750,000

Part B:

Now if the cost of Dissenture drops to $350,000, what is the maximum price Brain can ask to still win the contract?

$472,500

$533,000

$700,000

$600,000

Part C:

If Brain decides to be more aggressive and ask for $1,200,000, Dissenture will have a chance to win the contract. What is the maximum price Dissenture can bid to win the contract?

$1,000,000

$800,000

$525,000

$600,000

ROIB>=ROID and find the maximum DB ratio