Selling price of each version is needed

A Company is developing a new software that can be tailored to various market segments. At this stage, the developers envision three versions of the software: An Educational version, a Large-Scale version, and a High Speed version. Each is built around the same basic design, but a few data-handling and input/output procedures are different in the different versions. By creating these versions, the company hopes to extract more value from the marketplace than it could obtain with just one version. Currently, the developers are close to completing the Educational version, but they have done little more than outline the other two versions. The estimated R&D expenditures required to finish those tasks are $100,000 for the Large-Scale version, and $150,000 for the High Speed version. The actual variable costs are estimated to be $10 for the Educational version, $20 for the Large- Scale version, and $36 for the Highspeed version. The marketing director at the company has identified five market segments that would respond differently to the new software: (1) university students, (2) academic and government laboratories, (3) consultants, (4) small companies, and (5) large companies. The potential sales in each of these markets, together with the cost of advertising in each market, are as follows. Market Size 400,000 1,200 12,000 Marketing Costs $350,000 75,000 Segment Students Laboratories Consultants Small companies. Large companies 150,000 200.000 100,000 24,000 6,000 In a series of surveys and focus groups, the marketing staff has tested the interest of each market segment in the three different versions of the software. The results of the tests have been summarized in a table of values that represent the prices each segment would be willing to pay for each of the versions. This information is shown in the following table. Segment Students Educational Large-Scale $40 High-Speed $75 1,000 $25 Laboratories 125 300 Consultants 100 500 750 Small companies Large companies 75 250 500 1,000 150 2.500 In order to develop a price structure for the software, the marketing director uses the following logic. For each segment and for each version, the potential customer will calculate the benefit as the difference between the price and willing to pay. The highest difference will dictate what the customer will purchase. On that basis, it will be possible to estimate the sales volumes of each version in each segment and compute the resulting profits. Given the approach they have taken thus far, the company is committed to develop the Educational version, but it could halt development activities on either or both other versions. The question on everybody's mind is: which versions should be brought to market and at what price? What is the corresponding maximum profit? Develop and excel model to compute sales of each version in each market segment and calculate the profit. Further, answer which version should be brought to market and at what price. What is the maximum profit? Show all formulas used A Company is developing a new software that can be tailored to various market segments. At this stage, the developers envision three versions of the software: An Educational version, a Large-Scale version, and a High Speed version. Each is built around the same basic design, but a few data-handling and input/output procedures are different in the different versions. By creating these versions, the company hopes to extract more value from the marketplace than it could obtain with just one version. Currently, the developers are close to completing the Educational version, but they have done little more than outline the other two versions. The estimated R&D expenditures required to finish those tasks are $100,000 for the Large-Scale version, and $150,000 for the High Speed version. The actual variable costs are estimated to be $10 for the Educational version, $20 for the Large- Scale version, and $36 for the Highspeed version. The marketing director at the company has identified five market segments that would respond differently to the new software: (1) university students, (2) academic and government laboratories, (3) consultants, (4) small companies, and (5) large companies. The potential sales in each of these markets, together with the cost of advertising in each market, are as follows. Market Size 400,000 1,200 12,000 Marketing Costs $350,000 75,000 Segment Students Laboratories Consultants Small companies. Large companies 150,000 200.000 100,000 24,000 6,000 In a series of surveys and focus groups, the marketing staff has tested the interest of each market segment in the three different versions of the software. The results of the tests have been summarized in a table of values that represent the prices each segment would be willing to pay for each of the versions. This information is shown in the following table. Segment Students Educational Large-Scale $40 High-Speed $75 1,000 $25 Laboratories 125 300 Consultants 100 500 750 Small companies Large companies 75 250 500 1,000 150 2.500 In order to develop a price structure for the software, the marketing director uses the following logic. For each segment and for each version, the potential customer will calculate the benefit as the difference between the price and willing to pay. The highest difference will dictate what the customer will purchase. On that basis, it will be possible to estimate the sales volumes of each version in each segment and compute the resulting profits. Given the approach they have taken thus far, the company is committed to develop the Educational version, but it could halt development activities on either or both other versions. The question on everybody's mind is: which versions should be brought to market and at what price? What is the corresponding maximum profit? Develop and excel model to compute sales of each version in each market segment and calculate the profit. Further, answer which version should be brought to market and at what price. What is the maximum profit? Show all formulas used