CSC CASE ANALYSIS
Case 1 – Only Student software launched. In this case, the selling rate is $50 , the Unit Contribution will be fixed to $ 35 (50-15) for all other segments, and for student segment, it will be $15.( (60% of 50) -15). Case 2 – only Commercial software – The optimal price should be taken as 225 as that covers all other categories except the students. Case 3 – only Industrial software – the price should be 600 as the incremental contribution below this segment is less than the segment development costs. Version| Optimal Price| Total Contribution| Net Total Contribution TC-PCC| “Commercial”| $ 225| $ 7,750,000| $ 7,550,000|
“Industrial”| $ 600| $ 14, 805,000| $ 14, 305,000|
“Student”| $ 35 (15 for students)| $ 8,020,000| $ 7,920,000|
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Thus, the maximum profit is earned by selling the Industrial Version at price of $600 Consumer Surplus with “Industrial” @ $600 and “Student” @ $50 -------- | “Student” version“Industrial” | Large Co $100 (= $150 - $50) $1900 (=$2500-$600)| Labs $ 50 (=$100 - $50) $1400 (=$2000-$600)| Consultants$ 150 (=$200 - $50) $ 0 (=$600-$600)| Now we have 2 options for multiple versions – Industrial and student , Industrial and commercial. Surplus from Maximum Price for|
“Student” version “Industrial” version| Large Co $100 $2400 (=$2500-$100)| Labs$ 50 $1950 (=$2000-$50)|
Consultants$ 150 $450 (=$600-$150)| The consumer surplus shows how many segments will change to other option. The incremental contribution from targeting a product to a specific segment is lesser than the segment development cost in case of consultants. Thus, large cos and labs will take industrial and consultants..

And we also noticed that I version only caters for the first three segments, which means I version is more profitable among high-end customers. Meanwhile, under the optimal price, Student version (S) caters for all the segments and Commercial version (C) caters for the segments apart from students, which means S version can earn more from low-end customers and C version can earn more from middle-end customers.Therefore, if CSC wants to make more profit, it can use I version to attract high-end customers and use C or S version to attract middle-to-low-end customers. So based on these logics, we have two choices, which are S+I and C+I. In these combinations, we cannot directly know which situation is the most profitable one since there are many situations where different versions cater for different segments. To achieve the precise result, we listed all the possibilities and calculated all the profits based on the assumption of consumer surplus to see which combination is most profit. (Detailed calculation process can be found in Appendix.)S VERSION + I VERSION:SEGMENTSSITUATIONSC VERSION + I VERSION:SEGMENTSSITUATIONSFrom the above tables we can see that, S version + I version can achieve the biggest profit, which is $21,180,000. And the price should be set at $50 for S version and not more than 1950 for I version.In conclusion, the Student version and Industrial