As a Senior Executive, you have volunteered to mentor small businesses in your community to grow and become sustainable. One of your mentees - QuantCrunch Corporation is a small company that recently spent $15,000 to develop a statistical software package. To date the company only has one client. A recent internal study revealed that this client’s demand for the software is Qd = 300 – 0.2P (P=$1500 -5Q) and that it would cost QuantCrunch Corporation $1,000 per unit to install and maintain software at this client’s site.

Help your mentee- QuantCrunch Corporation with a pricing strategy by comparing (1) the profit that results from charging this client a single (profit-maximizing) per-unit price with (2) the profit that results from charging $1,450 for the first 10 units and $1,225 for each additional unit of software purchased.

1. What type of pricing strategy is (1)?
2. What type of pricing strategy is (2)?
3. Suggest a pricing strategy (3) and recommend which of the three maximizes profits for the firm. Show your calculations.