Reference no: EM133251118

Happy Valley Software has developed a new meteorology software package that will likely revolutionize the weather forecasting industry. They are looking to market the software to the following three segments:

Governmental applications (500 customers)
Scientific focused companies (1,500 customer)
Media outlets (TV, radio) (5,000 customers)

Further, assume for simplicity that:

Maximum willingness to pay (price) for each segment and package marginal costs to produce the software package are presented in table below.
There are no additional costs of market development.
There are no fixed costs incurred for setting up each package class.
Assume that segments that receive zero surplus, still will buy the package.
If customers get the same surplus from two versions, they will buy the Premium version.

They have developed the following two versions of the software:

Premium

Weather-Guesser

Marginal Cost = $10,000

Marginal Cost = $1,250

Segments

Maximum willingness to pay

Maximum willingness to pay

Government

$100,000

$30,000

Scientific

$65,000

$10,000

Media

$20,000

$7,500

Question: What is the best price point for the Premium Version to maximize revenue, assuming only one version is sold? (Provide answer in dollars.)