Pricing Strategy for a Boutique Coffee Roaster
A boutique coffee roaster currently sells 200 bags of its signature blend per week at a price of $16 per bag. The owner wants to increase sales to 220 bags per week and is considering two different promotional strategies that would result in two different new prices.
- Strategy A: A major price reduction would lower the price to $13 per bag for everyone.
- Strategy B: A more modest discount would lower the price to $15 per bag for everyone.
Analyze both strategies by breaking down the change in total weekly revenue into two components: the revenue gained from selling the additional bags and the revenue lost from the price reduction on the original 200 bags. Based on your analysis, which strategy should the owner implement to maximize total revenue?
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