Question

Statistica is a well-known database that caters to the research requirements of economists and data scientists. The penetration rate for Statistica is however, not as high as compared to similar products in the market with much less functionality. A market research report on the use of Statistica shows that the main reason individual researchers haven’t signed up for the database is the price.

To boost revenues, the top management of CIE Ltd., the creator of Statistica is contemplating a promotional price. Since this offer will be a part of our supplier promotion plan and will be publicised, the same deal has to be offered to our existing subscribers as well. A genuine concern of the top management is that the additional subscribers generated by the lower price may not fully offset the revenues lost from our existing base of subscribers.

Based on data on the current sales in the excel sheet, please comment whether lowering the price will yield higher revenues? Can you also arrive at an estimate of the maximum monthly revenues that can be achieved?

Please write your answer in the answer sheet. Excel calculations need to be attached too. Answers without excel sheet will not be evaluated (sheet attached).

Price	Number of subscribers ('000)	Licensing costs (Hundreds)	Administrative and selling costs (Thousands)
$20.00	36.97	$147.88	$                           15.50
$20.50	36.26	$144.65	$                           15.50
$21.00	24.82	$93.20	$                           15.50
$21.50	29.66	$114.96	$                           15.50
$22.00	26.90	$102.54	$                           15.50
$22.50	23.67	$88.02	$                           15.50
$23.00	27.49	$105.21	$                           15.50
$23.50	27.00	$103.00	$                           15.50
$24.00	26.76	$101.92	$                           15.50
$24.50	24.12	$90.05	$                           15.50
$25.00	19.64	$69.90	$                           15.50
$25.50	19.78	$70.53	$                           15.50
$26.00	19.22	$67.97	$                           15.50
$26.50	20.25	$72.61	$                           15.50
$27.00	15.64	$51.87	$                           15.50
$27.50	17.60	$60.68	$                           15.50
$28.00	12.86	$39.36	$                           15.50
$28.50	10.62	$24.77	$                           15.50
$29.00	10.74	$25.33	$                           15.50
$29.50	12.29	$36.81	$                           15.50
$30.00	10.05	$26.73	$                           15.50

Answer 1

Price	Number of Subscriber	Revenue	Licensing Cost	Administrative and Selling Costs	Total Cost	Net Revenue
$ 20.00	36970	$ 739,400.00	$       14,788.00	$         15,500.00	$ 30,288.00	$ 709,112.00
$ 20.50	36260	$ 743,330.00	$       14,465.00	$         15,500.00	$ 29,965.00	$ 713,365.00
$ 21.00	24820	$ 521,220.00	$          9,320.00	$         15,500.00	$ 24,820.00	$ 496,400.00
$ 21.50	29660	$ 637,690.00	$       11,496.00	$         15,500.00	$ 26,996.00	$ 610,694.00
$ 22.00	26900	$ 591,800.00	$       10,254.00	$         15,500.00	$ 25,754.00	$ 566,046.00
$ 22.50	23670	$ 532,575.00	$          8,802.00	$         15,500.00	$ 24,302.00	$ 508,273.00
$ 23.00	27490	$ 632,270.00	$       10,521.00	$         15,500.00	$ 26,021.00	$ 606,249.00
$ 23.50	27000	$ 634,500.00	$       10,300.00	$         15,500.00	$ 25,800.00	$ 608,700.00
$ 24.00	26760	$ 642,240.00	$       10,192.00	$         15,500.00	$ 25,692.00	$ 616,548.00
$ 24.50	24120	$ 590,940.00	$          9,005.00	$         15,500.00	$ 24,505.00	$ 566,435.00
$ 25.00	19640	$ 491,000.00	$          6,990.00	$         15,500.00	$ 22,490.00	$ 468,510.00
$ 25.50	19780	$ 504,390.00	$          7,053.00	$         15,500.00	$ 22,553.00	$ 481,837.00
$ 26.00	19220	$ 499,720.00	$          6,797.00	$         15,500.00	$ 22,297.00	$ 477,423.00
$ 26.50	20250	$ 536,625.00	$          7,261.00	$         15,500.00	$ 22,761.00	$ 513,864.00
$ 27.00	15640	$ 422,280.00	$          5,187.00	$         15,500.00	$ 20,687.00	$ 401,593.00
$ 27.50	17600	$ 484,000.00	$          6,068.00	$         15,500.00	$ 21,568.00	$ 462,432.00
$ 28.00	12860	$ 360,080.00	$          3,936.00	$         15,500.00	$ 19,436.00	$ 340,644.00
$ 28.50	10620	$ 302,670.00	$          2,477.00	$         15,500.00	$ 17,977.00	$ 284,693.00
$ 29.00	10740	$ 311,460.00	$          2,533.00	$         15,500.00	$ 18,033.00	$ 293,427.00
$ 29.50	12290	$ 362,555.00	$          3,681.00	$         15,500.00	$ 19,181.00	$ 343,374.00
$ 30.00	10050	$ 301,500.00	$          2,673.00	$         15,500.00	$ 18,173.00	$ 283,327.00

lowering the price will yield higher revenues and maximum revenue that can be achieve is $713,365.