Cambridge Software Corporation

In: Business and Management

Submitted By daarvin
Words 316
Pages 2
Single Version
CSC should offer industrial version at $600. Maximum net contribution is for this segment at $14.3 million. Modeler Version | Market Segment | Size | Segment Dev Cost | Price | Unit Contribution | Product Completion Cost | Net Contribution | Student Version | Large Corps + R&D Labs + Consultants + Small Bus + Students | 542,000 | $950,000 | $50 | $15 for students, $35 others | 100,000 | 8,869,950 | Commercial Version | Large Corps + R&D Labs + Consultants + Small Bus | 42,000 | $650,000 | $225 | $200 | 200,000 | 7,550,000 | Industrial Version | Large Corps + R&D Labs + Consultants | 27,000 | $450,000 | $600 | $565 | 500,000 | 14,305,000 |

Multiple Version
CSC should offer student version at $50 and industrial version at $1950. Maximum net contribution can be achieved when the 'heavy users' and 'light users' are served separately. Heavy users, though they are smaller in size have higher WTP.
The price for the industrial version has to be set at $1950 because otherwise the R&D and labs users will buy only student version as their consumer surplus is maximum there. So, to incentivize these customers, we lower the price by exactly the consumer surplus these users will get - $50.
Large MNCs will buy the industry version at $1950 as their surplus is maximum at $550. In the same way, consultants, small business and students will all buy at $50 as their consumer surpluses are $150, $125 and $0 and also because they don't have another option.
The total net contribution in this case is $20.58 million. Modeler Version | Market Segment | Size | Segment Dev Cost | Price | Unit Contribution | Product Completion Cost | Net Contribution | Student Version | Consultants + Small Bus + Students | 535,000 | $700,000 | $50 | $15 for students, $35 others | 100,000 | 7,925,000 | Industrial Version | Large Corps + R&D…...

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