You are a pricing analyst for QuantCrunch Corporation, a company that sells a statistical software package. To date, you only have one client. A recent internal study reveals that this client's demand for your software is Q=300-0.20P and that it would cost you $1,000 per unit to install and maintain software at this client's site. The CEO of your company recently asked you to compare

1. The profit that results from charging this client a single per-unit price with

(Hint: First find Q* by applying MR=MC, and then find the P*; Find maximum profit using the formula (P*-ATC)Q*)

2. The profit that results from two-part pricing

(Hint: set the per-unit price for each unit of the software installed and maintained equal to marginal cost, and charge a fixed "licensing fee" that extracts all consumer surplus from the client)

3. Which pricing strategy would you recommend to your CEO?