Memo 1 | Managerial Economic | Santa Fe College


Memo 1

To:  Pricing Manager, Tri-State Region

From:  Regional Vice President, Tri-State Region

Re:  Revenue from EPIX

We recently acquired the EPIX Movie Channels as sunder of a new ordination of programming for our digital video subscribers. The EPIX channels are sold as an add-on parcel for $9.75 per month, but we would enjoy to theoretically acception our proceeds from our subscriber vile. Currently we entertain environing 15,059 subscribers, generating monthly proceeds of $146,823.

Some entertain suggested we should cut cost, as customers contribute to be fairly cost easily-affected for add-on parcels. However, in this event, if we inferior cost for our new subscribers; we truly deficiency to cut it to all of our bulky subscribers as well-mannered. I entertain some concerns that inferioring cost earn be counter-productive. 

The marketing branch adapted some subscription levels at diversified cost points in this territory, and I deficiency you to enact the decomposition. Specifically, I neglect you to prize the cost sensitivity of customers at the running cost. Please oration the subjoined questions: (1) If we inferior the cost, do you gard this is enjoyly to transfer to loftier proceeds, and (2) how abundant germinative proceeds can we breed and how low should we go after a while our cost?

Thanks for your acceleration.

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