1. If CSC offers only one version of Modeler, which should it be and at what price?
It should be the Industrial version which targets for large, multidivisional corporation,
corporation, R&D labs, as well as consultants and professional companies at a price of $600 per
unit with over $14mm total contribution.
Detail calculation is below:
2. Should they offer more than one version? If so, which ones and at what price?
Yes, they should offer more than one version. Since the Industrial version produces the highest
contribution, we will keep this version. The second highest contribution will be the Student
segment. Thus, profit will be maximized if we offer both Industrial and Student versions. We tried
pricing below and found that $1950 gives the highest net total contribution margin for Industrial
version and $50 gives the highest net total for Student version. The combine of the two will give
us over $18mm total contribution.
It should be the Industrial version which targets for large, multidivisional corporation,
corporation, R&D labs, as well as consultants and professional companies at a price of $600 per
unit with over $14mm total contribution.
Detail calculation is below:
2. Should they offer more than one version? If so, which ones and at what price?
Yes, they should offer more than one version. Since the Industrial version produces the highest
contribution, we will keep this version. The second highest contribution will be the Student
segment. Thus, profit will be maximized if we offer both Industrial and Student versions. We tried
pricing below and found that $1950 gives the highest net total contribution margin for Industrial
version and $50 gives the highest net total for Student version. The combine of the two will give
us over $18mm total contribution.
