As you know we have a line of professional computer training DVDs that have not been producing good margins. The one that seems to be dragging the most is our Microsoft Vista tutorial. Specifically, we are taking losses on our sales volume right now and I would like you to take a look at our current pricing scheme. Our sales department has estimated our monthly demand to be Q = 1,212 – 4P and our accounting department has informed me that our cost structure is effectively C(Q) = 91,000 + 3Q.
We are currently pricing our product at $158 and selling 580 units per month, which is bringing us a loss of $1,100. Let me know if we should re-address our price point decision, or if we should consider withdrawing from the market.
If we can improve the situation I might be inclined to roll out another advertising campaign to try and boost interest for the DVDs, so your review is of the utmost importance.