The managers of Midwest Whitetails magazine (a magazine dedicated to deer hunters) want to establish a price for customers wishing to place a full-page advertisement in their magazine for one month. To help with the price setting decision, the managers intend to compute the economic value to the customer (EVC) of a full-page ad in their magazine. They have gathered the following data pertaining to Midwest Whitetailsmagazine as well as their primary competitor, Trophy Whitetailsmagazine:

	Midwest Whitetails	Trophy Whitetails
Number of readers	130,000	200,000
Percent of readers who buy advertised products each month	0.7%	0.5%
Monthly spending per reader who buys advertised products	$120	$100
Contribution margin ratio of advertisers	40%	40%

Trophy Whitetails magazine charges $4,000 per month for a full-page ad. Midwest Whitetails' managers believe they can charge more than $4,000 by quantifying the economic value to its customers of placing an ad in their magazine.

Although Midwest Whitetails has fewer readers than Trophy Whitetails(130,000 vs. 200,000), Midwest Whitetails attracts a segment of hunters that is more likely to buy advertisers' products than the casual hunters that tend to subscribe to Trophy Whitetails. Therefore, a higher percentage of Midwest Whitetails subscribers buy advertised products (0.7% vs. 0.5%) and they spend more per person on advertised products ($120 vs. $100). The managers of Midwest Whitetails assume that advertisers in both magazines earn an average contribution margin ratio of 40% on all of their merchandise sales.

Required:

From a value-based pricing standpoint:

1. What is the reference value that Midwest Whitetails should consider when setting the price of a full-page ad in its magazine?
2. What is the differentiation value offered by a full-page ad placed in Midwest Whitetails magazine?
3. What is the economic value to the customer (EVC) of a full-page ad in Midwest Whitetails magazine?
4. What range of possible prices should Midwest Whitetails consider when setting a price for a full-page ad?