Suppose you are the assistant to the CEO of Proflix, a streaming service for historical classic, legendary games in all college and professional sports, updating its content each month (much like Netflix does with TV shows and movies). The CEO states that she wishes to charge $25 per month immediately when the product debuts, with five free premium downloads each month. You are in the elevator with her prior to a meeting with the company’s upper-level management and say to her, “Boss, what about a fixed-rate fee of $10 per year to access the site, then a $1.00 charge for each premium download?” Describe your point of view and how this could potentially be a revenue generator for the company.
Charging a lower price of $10 per year to access the site would
look cheap to the subscribers and they would not shy away from
taking the subscription, as $10 per year is a cheap deal.
As compared to $25 per year, where the potential subscribers might find it to be an expensive subscription and they might look for other alternatives.
Also, charging $1 per premium download would incentivize subscribers to download more games as it costs $1 which is almost nothing. This will induce consumer spending and thus bring in more revenues for the company.
Suppose you are the assistant to the CEO of Proflix, a streaming service for historical classic,...
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