Reference no: EM133422859

Case Study: You find yourself in a conversation with the creative director, who knows nothing about pricing but wears a green mask with pointy ears and speaks in a strange way. "Two types of customers, there are," he says. "To the museum once a year Young Padawans go. If a Jedi Master you are, thrice a year attend, you must," he continues. He then goes on and on, but you are able to understand that so-called Young Padawans attend the Museum once a year and their willingness to pay for that visit is $60, whereas Jedi Masters attend three times a year, and their willingness to pay for all these visits together is $200. It remains unclear how much Jedi Masters would be willing to pay for only one or two visits, but you suspect that the first yearly visit must be more fun than the second, and the third still less.

From a lightsaber-wielding customer service representative you find more detailed information about current pricing. You can get one-time admission for $50 or yearly membership for $120, and members typically visit the museum three times (confirming your suspicion that these are the Jedi Masters indeed). You then proceed to the meeting room where you would be asked about profit improving pricing strategies.

Question.

The proposal is to keep the price of one-time admission at $50, but increase the price of yearly membership to $150 (from the current $120). Would you consider this suggestion profit-improving? Or are you lacking the information needed to answer this question?