Assume there is one customer in each group. Show through calculations that the bundled price of $10.5 generates more revenue (and also more contribution in this case) than unbundled pricing. Specifically, you need to show: 

what is the optimal price for each of the two phone services if they are priced separately (show each step of calculations)? 

What is the total revenue if they are priced separately at their respective optimal prices (show each step of calculation)? 

Why is $10.5 the optimal bundled price among the four bundled prices (show revenue calculation)? 

How much more revenue is gained by charging $10.5 bundled price, relative to charging the respective optimal price for each of the two services? 

Note: 

Need to show every step of your calculation. 

What is the takeaway message that can be applied to other pricing situations? Particularly, under what circumstances should you consider bundling? 

 

Transcribed Image Text:

Customer Voice Mail Hot Line Voice Mail + Group Hot Line 1 9.0 1.5 10.5 8.0 5.0 13.0 3. 4.5 8.5 13.0 4 2.5 9.0 11.5 Customer Voice Mail Hot Line Voice Mail + Group Hot Line 1 9.0 1.5 10.5 8.0 5.0 13.0 3. 4.5 8.5 13.0 4 2.5 9.0 11.5

Answer rating: 100% (QA)

A person will buy the services when the willingness to pay as given in the table in the question is more than the price that is charged for that servi... View the full answer