A manufacturer of a new electronic product PONITES conducted a market research survey to determine purchase likelihood of its new brand for different prices. The survey results are indicated below. If all potential customers purchase, 3 million units would be sold. The company expects variable product costs to be $350. Traditionally, the company prices at 200% of variable cost ($700 in this case) and the finance department insists that this maximizes profits. Is the finance department correct? Create a table using the data below and include expected sales and expected gross margin. What is the profit maximizing price?
Price Would Buy
800 0.1
750 0.2
700 0.3
650 0.4
600 0.5
550 0.6
500 0.7
450 0.8
400 0.9
350 1