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Case ofCambridge Software Corporation

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If CSC offers only one version of Modeler, whichversion should it offer?

At what price?

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Demand function for Industrial

(No substitutes case)

2500

P

Q7000

2000

27000

600

42000

300

5000 542000

100

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Demand function for Commercial

(No substitutes case)

1200

1000

30022560

P

Q7000

27000 420005000 542000

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Demand function for Student

(No substitutes case)

200

175

15010050

P

Q3500040000

4200020000 542000

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Pointers

What are the possible prices for eachversion?

Revisit the demand functions

What is CSCs objective?

Profit maximization

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Which version of Modeler has the most elasticdemand?

Student

Which segment is the largest segment?

Students

Pointers contd.

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CSC Single version case

What is the profit maximizing price forStudent?

Calculate profits for each possible prices?

Similarly find the profit maximizing price forCommercial and Industrial.

Which one is the optimal version?

One with the maximum profit.

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Conclusion

If CSC offers one version, it should offerIndustrial at $600

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Multiple versions?

Should CSC offer multiple versions?

If CSC decides to offer multiple versions, which arethe versions that it should offer?

At what prices?

If CSC decides to offer multiple versions, should itoffer 2 versions or all 3?

If CSC decides to offer two versions, which are theversions that it should offer?