Single-price pricing strategy

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Question

Coffee Staines is an online only coffee company. There are currently using a single-price pricing strategy, charging $12 for a one pound bag of their standard coffee beans. Based on their weekly sales data, they believe that there is an opportunity to increase profit for this product by implementing a new pricing strategy. In the past, they have used a membership-pricing strategy and a block-pricing strategy, but at this time they are not interested in returning to either one of these strategies. Their data analytics team has determined they have two types of buyers: (1) One-time buyer who is a new buyer who only makes one purchase per year and (2) Repeat buyer who is an existing buyer who makes multiple purchases per year. Using weekly sales data, the following weekly demand functions were estimated for a one pound bag of coffee beans. Marginal cost is constant at $2 per one-pound bag of beans. QO = 3,000 - 200PO - Demand for one-time buyers QR = 4,000 - 100PR - Demand for repeat buyers Coffee Staines is interested in reviewing the profit maximizing prices to charge to each group and the associated profits. They are curious to see if they.

Reference no: EM134039709

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