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I must decide on pricing of new software. There are two market segments of the same size: A (one million) and B (two million).
I must decide on pricing of new software. There are two market segments of the same size: A (one million) and B (two million). Tough A would be willing to pay up to $8,000 and B up to $2,000 for the full version of the software. A substantially scaled-down version of X would be worth $1,000 to B and is worthless to A. It is equally costly to sell any version. In fact, other than the costs for initial development, production costs are zero. What are the optimal prices that I could charge for each version of the software?
If instead of the scaled-down version, I could sells a different intermediate version that is valued at $4,000 by A and $1,500 by B, what are the optimal prices in this new situation for each version of the software. Am I better off by selling this new intermediate version instead of the original scaled-down version?
