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Alice Bates

Alice Bates needs to reduce prices to her companies operating system software since its getting strong competition from a number of competitors. If she institutes a 30% discount she can probably increase next year's sales 25%. But if she reduces the price 60%, she can get it installed on notebook computers which is expected to increase sales 50%. However, her CEO noted that the sales of their software suite would grow at the same rate as the operating system sales and sales quantities approximately equal to sales of the operating system software. No price changes are being considered for the Software suite.

Assuming that the present sales quantities of the operating system software are 2 million units and they currently sell for $300.00 The software suite sells for $350.00. Sales, general and administrative costs average $50 per unit for each and are not expected to change.

How does one compare the no change and two alternative price changes.

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Alice Bates needs to reduce prices to her companies operating system software since its getting strong competition from a number of competitors. If she institutes a 30% discount she can probably increase next year's sales 25%. But if she reduces the price 60%, she can get it installed ...

Solution Summary

This solution is comprised of a detailed explanation to answer how does one compare the no change and two alternative price changes.

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