A computer hardware firm sells both laptop computers and printers. It has a large inventory of laptops and printers that it wants to sell, so it has no variable production cost. Through the magic of focus groups, their pricing team determines that they have an equal number of three types of customers, and that these customers’ reservation prices are

a. If the firm were to charge only individual prices (not use the bundle price), what prices should it set for its laptops and printers to maximize profit? Assuming for simplicity that the firm has only one customer of each type, how much does it earn in total?
b. After conducting a costly study, an outside consultant suggests that the company could make more money from its customers if it sold laptops and printers together as a bundle instead of separately. Is the consultant right? Assuming again that the firm has one customer of each type, how much does the firm earn in total from pure bundling?
c. Why does bundling pay or not pay?

  • CreatedNovember 13, 2014
  • Files Included
Post your question