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You are starting a small software company developing an application for unspecified nefarious purposes.Between yourself and two software developers,...
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Q. You are starting a small software company developing an application

for unspecified nefarious purposes. Between yourself and two software developers, you have total monthly wages of $15,000. Your small office in Hawaii costs $2400 per month in rent and utilities. 


You license your software to client companies at $1,000 per month. You outsource your customer support, and based on expected volumes you estimate each client will cost you an average of $300 per month in support costs. 


A.   Calculate how many clients you need to break-even on a monthly basis. 


B.    What is your average cost per client at the break-even point? If you double the number of clients from there, what is the new average cost per client?  

Step-by-step answer

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Subject: Business, Economics

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