## Quantitative Assignment Case Solution

## Quantitative Assignment Case Solution

**Phase 1 Task**

**Part 1:** The percentage markup for the subscription pricing is 15.00%. This percentage markup has been calculated based upon the change in price and this change is 75%. This change affects the costs of subscription and the costs of device. For the calculation of the markup percentage, the cost of subscription and the cost of device have been assumed to be 30% and 70% respectively. The calculations are shown in excel spreadsheet and attached in the appendix.

**Part 2:** There are many concerns regarding this survey which should be considered and changes should be made. First of all, the demographic factors have not been considered in this survey. For example, the age groups have not been defined, the population of the survey has not been defined and the income levels of the different groups of the population have also not been considered. Along with this, the occupation of the individuals belonging to the different classes should have also been identified in advance of this survey construction.

It also seems to be true that the firm conducting this survey did not have any clear objectives or goals to achieve through this survey. The management of the firm should have either merged the phone with the contract or with the service. Open ended questions should have been asked to the individuals such as what is the most desirable price which they would be willing to pay and what might be the factors due to which they might not buy the services of the company.

**Phase 2 Tasks**

**Part 1:** The price elasticity of demand is defined as the ratio between change in demand and the change in price. The price elasticity of demand in this case is negative 0.75. There is also a lot of variation in the sales and the subscription prices data which is shown by the high value of standard error which is 1.2. Therefore, the only concern which I have along with my recommendation is that the prices should not be changed frequently and same prices should be charged by the firm.

**Phase 3 Tasks**

**Part 1a:** The calculations for purchase intention are shown in excel spreadsheet and also in appendix. The EVC demand curve is shown below:

**Part 1b:** The calculations for purchase intention are shown in excel spreadsheet and also in appendix. The EVC demand curve is shown below:

**Part 3a:** The revenue maximizing price for the subscription as a monopoly would be $ 16.52 and for the optional content bundle would be $ 12.93 as shown in excel spreadsheet calculation.

**Question 2: Childcare Services Pricing in a Ski Resort**

**Part 1:** Based upon the given costs, the price charged by the business in winters would be $ 136 per child and $ 91 per child in all the other three seasons. The calculations for these prices could be seen in the excel spreadsheet and the appendix attached.......................

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