A Professional Services Firm Is Investigating Revenue Management as a Means

question 20

Essay

A professional services firm is investigating revenue management as a means of taking advantage of unused capacity. Analysts for this firm estimate a demand curve for the firm's service, which is sold by the hour. Points on this demand curve include 9000 hours at the current rate of $60 per hour, 9500 hours at $55, 10,000 hours at $50, and 10,500 hours at $45. Based on this demand curve, what price point would be best for the firm, if its objective is maximum revenue?

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Definitions:

Experiential Attributes

Characteristics of a product or service that can only be assessed after direct experience or consumption, such as taste or satisfaction.

Transactional Costs

Expenses incurred during the process of buying or selling services or commodities, encompassing costs associated with information, negotiation, and enforcement of contracts.

Financial Outlay

The amount of money spent or invested in a specific endeavor or project.