Day Lily Software Inc. was started in 2010 by college friends Candace and Tyler. The call ended with a tentative agreement to start a new company. Five months later Day Lily Software Inc. was born, and development began on Integrated, their all-encompassing, integrated software solution for businesses became a reality. Today they serve four main consumers: large corporations, university laboratories, consultants, and small businesses. Integrated has been a huge commercial success. The worksheet titled “Table 1” in the Excel file “Day Lily Software Inc Table 1” provides an overview of the market research data Milk generated. The table shows the four market segments, the anticipated size of each segment, and each segment’s willingness to pay for the two different versions of Integrated. It also includes projected costs of production and marketing. You can see the estimated production completion cost for each version, the variable cost per unit sold for each version and the segment development costs for each market segment. After looking at Table 1, Candace and Tyler realized they had multiple, dynamic questions to answer. Should Day Lily Software Inc. keep only one version of integrated? If so, which one? How should they price the products if they offer multiple versions? Assignment: Answers to questions 1 and 2 (below) should be typed into a Word document. The tables for question 3 are in the Excel file in the worksheet titled “Q3.” Both files should be uploaded to the Online Campus at least 24 hours prior to synchronous session #1. 

1. Does the data in Table #1 simplify reality? In what ways? How might that make the firm’s decision difficult? 

2. Articulate (in jargon-free English) what are the factors affecting the pricing decision for Integrated – Standard Edition. How do these factors affect the pricing decision (don’t use numbers)? 

3. Calculate the profit Day Lily Software Inc. will realize from each “Willingness-to-pay” (price) listed in Table 1, for each version of Integrated, assuming only that version is offered. Please place these calculations into the tables included in the worksheet titled “Q3” within the Excel file “Day Lily Software Inc Table 1.” Hints: (i) the prices will be different for the Standard and Enterprise versions of Integrated; (ii) assume the firm is unable to price discriminate within a given version of the software (meaning all customers must pay the same price for that version).

Table 1 Cost, Demand, and Willingness to Pay Estimates
					"Standard"	"Enterprise"
Estimated Production Completion Cost					$100,000	$200,000
Variable Cost (per unit)					$15	$25
Market Segment		Size	Segment Dev. Cost		Willingness-to-Pay (per unit)
Large corporations		8,000	$150,000		$250	$1,600
University laboratories		5,000	$100,000		$175	$1,000
Consultants		20,000	$200,000		$200	$250
Small businesses		15,000	$200,000		$150	$200

Standard Version						Enterprise Version
Price	Quantity	Total Revenue	Total Cost	Profit		Price	Quantity	Total Revenue	Total Cost	Profit
$       150						$       200
$       175						$       250
$       200						$    1,000
$       250						$    1,600

Answer rating: 100% (QA)

Question 1 Does the data in Table 1 simplify reality In what ways How might that make the firms decision difficult The data in Table 1 does simplify reality in several ways a Segmentation It simplifie... View the full answer