Seven years ago, you started a cross=town delivery service. You have two types of delivery services. You have a small parcel service for anything that is flat and measures less than 11x17. You have a package service using a 100 lb. capacity bike trailer for anything weighting up to 10 lbs. Initially, you charged the same price for each service., but since the beginning of the COVID-19 pandemic you have seen an increased in the demand for your package service. The demand for the package services seems to be more inelastic than the demand for parcels. You are now wondering if you should charge different prices for the parcel and package service or should you segment the market and charge two different prices.

Price Parcels & Packages TR MR TC MC MR-MC Profit

100 50 1600

90 120 2300

80 190 3000

70 260 3700

60 330 4400

50 400 5100

40 470 5800

30 540 6500

20 610 7200

10 680 7900

The Parcel Markets

Price Parcels TR MR TC MC MR-MC Profit

100 0 1600

90 50 2300

80 100 3000

70 150 3700

60 200 4400

50 250 5100

40 300 5800

30 350 6500

20 400 7200

10 450 7900

The Packages Market

Price Packages TR MR TC MC MR-MC Profit

100 50 450

90 70 650

80 90 850

70 110 1050

60 130 1250

50 150 1450

40 170 1650

30 190 1850

20 210 2050

10 230 2250

What is the best pricing strategy? Demonstrate the difference in the profit from each strategy.