Cambridge Software Corp. - Case Solution
Cambridge Software Corp. (CSC) is looking into offering several versions of its new software product. The three different versions of the product are high end "industrial," a mid-range "commercial," and a low-end "student" version. The company came up with five target market segments. But it is still in a dilemma which of its three versions to offer. Students are given the opportunity to take into consideration the market segments' sizes, customers' interests, and the costs involved.
Case questions answered:
- If Cambridge Software Corp. (CSC) were to offer only one version of Modeler, which version should it offer and at what price?
- How many different versions of the Modeler should CSC offer? At what price? Show your workings.
Cambridge Software Corp. Case Answers
This case solution includes an Excel file with calculations.
1. If Cambridge Software Corp. (CSC) were to offer only one version of Modeler, which version should it offer and at what price?
If Cambridge Software Corp. (CSC) were to offer only one version of Modeler, it should offer the “Industrial” version of the product and price it at $600.
This will make the product viable to the top three segments, namely, Large and multidivisional corporations, Corporate R&D and university laboratories, and Consultants and professional companies.
This is based on the calculations of the total contribution of each version (See Exhibit 1).
The Industrial version at a price point of $600 yields the maximum contribution of $14.3 MM for Cambridge Software Corp.
Formulae Used:
Unit Contribution = Willingness to pay(Price) - Unit Variable Cost
Total Profit (Contribution) = (Unit Contribution x Size) - Segment Dev. Cost - Production Completion Cost
2. How many different versions of the Modeler should CSC offer? At what price?
CSC can offer different combinations of versions of Modeler.
By offering the Industrial version alone, CSC cannot…
Unlock Case Solution Now!
Get instant access to this case solution with a simple, one-time payment ($24.90).
After purchase:
- Solution files delivered straight to your inbox.
- Secure checkout — no account required.
Best decision to get my homework done faster!
Michael
MBA student, Boston
FAQ
How do I get access?
Upon purchase, you are forwarded to the full solution and also receive access via email.
Is it safe to pay?
Yes! We use secure payment providers to process your transaction safely.
What is Casehero?
We are the marketplace for case solutions - created by students, for students.