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.

Attachment: Epix.xls