Please explain step by step!

Memo 4:

To: Pricing Manager, Tri State Region

From: Regional Vice President, Tri-State Region

Re: Revenue from EPIX

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 of $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 increase if we adjust price to the recommended level. Also, please note whether this will impact our revenue. Please Explain in detail why revenue will increase or decrease.

Price	Number of Subscribers (Thousands)	Cost of License Fees (Thousands)	Divisional Sales, General and Administrative Costs (Thousands)
$5.00	29.974	$ 134.883	$ 14.50
$5.50	29.256	$ 131.651	$ 14.50
$6.00	17.822	$ 80.199	$ 14.50
$6.50	22.657	$ 101.956	$ 14.50
$7.00	19.897	$ 89.537	$ 14.50
$7.50	16.671	$ 75.017	$ 14.50
$8.00	20.492	$ 92.213	$ 14.50
$8.50	20.000	$ 89.998	$ 14.50
$9.00	19.760	$ 88.920	$ 14.50
$9.50	17.123	$ 77.053	$ 14.50
$10.00	12.644	$ 56.896	$ 14.50
$10.50	12.785	$ 57.531	$ 14.50
$11.00	12.216	$ 54.974	$ 14.50
$11.50	13.246	$ 59.608	$ 14.50
$12.00	8.637	$ 38.867	$ 14.50
$12.50	10.595	$ 47.678	$ 14.50
$13.00	5.857	$ 26.357	$ 14.50
$13.50	2.615	$ 11.768	$ 14.50
$14.00	2.739	$ 12.326	$ 14.50
$14.50	5.291	$ 23.809	$ 14.50
$15.00	3.051	$ 13.730	$ 14.50