To: Andrew From: Liz Re: Pricing Plans for Online Gaming Dear Andrew, Thank you for your input into last week's meeting of the management team. Based on that meeting, as well as conversations with the Board, I've summarized the factors that seem important for our pricing scheme. Please keep all in mind when you make your pricing recommendation for the online gaming launch. Cost of providing the service: $.12/minute, >1.8 million units per month $.115/minute, 1.5-1.8 million units per month Competitive pricing strategy: Be competitive with other brand-name providers. Stay above low-cost competitor (SuperPlay = $.18/minute, WildGames = $.17/minute, BudgetGames = $.13/minute). Financial pricing strategy: Maximize revenue while still generating some profits. Gouging considerations: Price no more than 50% above costs. Elasticity: $.15/minute will generate 2 million units sold per month $.16/minute will generate 1.9 million units sold per month $.175/minute will generate 1.7 million units sold per month $.19/minute will generate 1.6 million units sold per month