Should impress4less drop prices further

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Reference no: EM133501680

Assignment:

Mini-Case Personal Brand Management

Impress4Less is a company founded by two b-school recent alumni. They both had taken advantage of their school's career placement services, and thought they could offer additional supplemental services and advice. They're constructing a website where anyone looking for help in positioning themselves for a new job might go to download templates of resumes, examples of personal brand brief 'elevator pitches,' videos of strong and weak interview answers, and the like. Their plan is to offer some of those basics for free, to get people onto the website. But what they're really interested in selling is their consultation time, consisting of feedback on resumes and help with practice interviews.

They're working with their former school's entrepreneurial club in proposing to launch their online premium service for $50. This past year served as a test market at the b-school. Given the friendly partnership, and as a learning opportunity for the students, Impress4Less shared some information on basic cost structures. Their fixed costs on this project were $3,000, and variables costs were $10 per user exchange.

Currently at the b-school, the situation is as it looks in the figure below (to the left); that is, 200 users purchased their services during the last academic year at the $50 price. But the club members get regular feedback (from classmates) that the $50 price tag seems steep, so they're asking Impress4Less for a price cut of 10%, essentially going to the figure at the right.

1. How many users would have to buy at $45 to at least meet last year's profits?

2. Should Impress4Less drop prices further? Could they raise prices above $50?

3. What assumptions are you making?

Reference no: EM133501680

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