pricing strategy
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You have just been hired as manager of a new health spa in Retirement Village, Florida. The owner has commissioned a market study that estimates the average customer's monthly demand curve for visiting health spa to be Q(d) = 50-.25P. The cost of operating is C(Q)=3Q, where Q is the number of visits. The owner has been charging a $20/month membership fee and a $5 per-visit fee. Part of your salary is 10 percent of the ontly profits. Suggest a pricing strategy that will increase your salary.
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This posting suggests a pricing strategy that will increase your salary.
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With the original pricing scheme, the number of visits per customer is Q = 50 - 0.25*50 = 48.75. Hence, profit from each customer is $20 + ($5 - $3)(48.75) = ...
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