Create and answer a case study similar to Memo 6 from Time Warner (Most Relevant Chapters 5, 8, and 11) that looks at whether profits can be increased by changing the price. Collin Hornbaker Wiki Final Paper
What is Profit?
Profit is defined as any revenues that exceed the cost of inputs as well as the fixed costs associated with the firm. Profits are regularly regarded as the best source of finance for a firm. For that reason, Profits are regarded as one of the best measures of success when reviewing a business. Regular inputs in calculating Profits are : Quantity Sold, Variable Costs, Fixed Costs, and the variable we will take a closer look at, Price.
Calculating Profit Maximization
For the purposes of this discussion, we will be taking a look at how to maximize profits based on changing price. To do so, we need to first find the Marginal Revenue function. From there, we need to find the Marginal Cost function. After Marginal Revenue and Marginal Costs functions are know, we need to then set them equal to each other to find the optimum quantity by solving for Q. To then find the optimum price for profit maximization, we will then plug in the optimum quantity to the inverse demand function and solve for P. In this case, P will be the most effective price for maximizing Profit. From here, we can find profit by multiplying the price and quantity we just found less the costs associated with the product and firm.
Possible Effects of Price Change
The average person (not an economist in this case) might think that to increase profits, they could simply increase the price to make more profit. However, one look back at a simple Supply and Demand graph, specifically the Demand side, will generally show that as price increases, demand will decrease. This means that as you increase your price, fewer people will buy your good or service. However, it really depends on which side of the optimum price you are on to calculate the impact on profits.
If your price is too low, more people will demand more products but you will not be charging a price that could generate enough marginal revenue to equal the amount of profits that a higher price will yield. In an attempt to increase marginal revenue you increase the price. However, if you increase it past the optimum point, you will actually begin to see negative returns on revenue the more price increases. Therefore, in order to be as profitable as possible (which we pointed out is a major measure of success for business), we must strive to find the optimum price that will yield a quantity that will maximize profits for a firm.
Monopolies and Profit Maximization
As many of us know, monopoly could mean an extremely frustrating board game where the banker is a cheating thief, a chance to win free hash browns at McDonalds, or a single producer of a product or service with no close substitutes. Because the previous are outside this forum, we will look at the latter form of monopoly. As a monopoly is the sole producer of a product/service, one might think that a monopoly can simply increase their pricing at will because customers are forced to buy it from them or not buy it at all. Although it is true that a monopoly is a price setter rather than a price taker, they too must run the numbers on pricing to find the optimum point for profit maximization. This is because, at a certain point, like with all pricing strategies, pricing can have negative impacts on profits.
Like with all demand, when a monopolists raises prices demand will generally fall. However, this is not the main concern as we noted earlier. In terms of profit maximization, we are more interested in marginal revenue and marginal cost. Let us first examine marginal cost. The value of marginal cost is determined by the effect of price on the quantity demanded. If this sounds a lot like elasticity, that is because it is elasticity of demand. The following table shows the effect on marginal revenues concerning elasticity of demand.
E > 1
MR > 0
output effect > price effect
E < 1
MR < 0
price effect > output effect
E = 1
MR = 0
price effect = output effect
As you can see monopolists will not want to produce in the inelastic potion (E < 1), as marginal revenue will be less than 0. Also not that when MR > 0, this means that marginal revenue is increasing faster than marginal costs and the firm should produce more. Now we will look at how to use our knowledge of MR to find profit maximization.
To produce at an optimum point where profits are at there maximum, we must examine marginal revenue and marginal cost together. The following table can give some guidance on how to price and produce in given situations concerning marginal revenue and marginal cost.
MC < MR
Producing more units will add more to Total Revenue than Total Cost
Increase Output
MC > MR
Producing more units will add more to Total Cost than Total Revenue
Decrease Output
MR = MC
Producing more or less will effect Total Revenue or Total Cost adversely
PROFIT MAXIMIZATION!
In the case of the monopolists, they will generally produce less than the socially efficient output and charge a higher price because of it. For the most part, the formula for calculating profit maximization is much the same for monopolists. The advantage they have over other market structures is there price maker ability. This allows the firm to be able to work on pricing schemes and take out the variables that are associated with competition that would have other effects on the ability to accurate forecast the models associated with profit maximization.
Perfect Competition and Profit Maximization
In a perfectly competitive market, we have some given characteristics. Firms can freely enter and exit the market, goods are very similar (individual firms have elastic demand), and due to the amount of buyers and sellers, individual firms are price-takers (that is, they set their prices equal to the industry standard). As we are focusing on pricing effects on profits, we will examine how these firms can maximize profits with little or no control over price.
In a perfectly competitive market we see that a firm must pick a price consistent with the market. Therefore, to identify the profit maximization point, we simply need to know the marginal cost because marginal revenue is already given as the industry constant demand. When we arrive at the point where marginal cost equal marginal revenues, as always, we will see profit maximization. The graph below pertains to this previous concept in the short-run only.
Although we see it is possible maximize profits in the short-run, given the constraints of the market structure, the fact remains that in perfect competition it is impossible to make an economic profit in the long-run. This is because others will see the profits being made, and with no barriers to entry, they will enter in to the industry. As more firms enter the market, we will see higher industry production which by economic law will drive down prices. This price decrease will lead to a decrease in revenues until firms are pushed out of the industry as prices sink below firms costs. The following graph demonstrates a perfectly competitive market in the long-run.
As we have seen, a firm is able to still maximize profit, even as a price-taker, at least in the short-run. It is all a matter of the conditions in the market and marginal revenue/cost. It is very possible for a firm to maximize profit, given their situation, in the long-run if the market is not perfectly competitive. This is good news for business because we know that it is impossible to have a perfectly competitive market structure.
A Real World Example: Cancer Drug that Few Can Afford
A few years ago, the pharmaceuticals market encountered a phenomenon that many did not understand. A pharmaceutical company, Genetech, created and were FDA approved to use an existing drug on new conditions. The drug Avastin was widely used as a treatment of colon cancer was now approved to assist in treatment in specific breast and lung cancer patients. One would assume this is great news in the field of cancer treatment. Though it is great news in the fight against cancer, it came at a price. That price was a 50% increase for the new treatment option patients. This caused many patients and doctors alike to be in a frenzy. Many attacked the price citing that a majority of the public could not afford the new drug at that price point.
Although it is unfortunate that a majority of patients that qualify for this drug cannot afford to pay for it, there is still a market of patients who can and do pay for the drug. It is certain that Genetech saw a change in the market (customer base expansion due to new treatment options) and figured a new profit maximization pricing strategy accordingly. This means that the expansion causes a greater demand in the market. If Genetech were to satisfy the market for Avastin, they most likely would be at a price quantity combination that different than the optimum combination. Accordingly, Genetech placed the price tag that was most likely to get the firm maximum profits, or as close as possible. In this case, it happens that the optimum combination consist of extremely high prices, and extremely low quantities, as compared with the market demand. This point backed by a statement from an executive at Roche Pharmaceuticals, majority owner of Genetech. William Burns, Chief executive at Roche Pharmaceuticals, stated in regard to exorbinant prices of Avastin and another of the companies other cancer drugs, "As we look at Avastin and Herceptin pricing, right now the health economics hold up, and therefor I don't see any reason to be touching them." This is a pretty clear statement that they are fulfilling their economic/financial initiatives (profits in this case) so why change? Clearly, from a business perspective, it is agreeable that a firm must set prices that benefit the companies well-being. Genetech, in this situation, is simply trying to use their financial and market models to achieve their financial goals (which is profit maximization). From a business perspective, this case is fascinating and very intriguing. From an ethical or even just human perspective, this case is uphauling and frustrating. However, this is just another case of ethical gray areas in business that we must deal with everyday.
A Real World Example: Netflix Pricing Wins and Losses
Back in mid 2011, Netflix made public their new pricing scheme that would separate their online content and DVD delivery into separate business units and increase the total cost of both by nearly 50%. As a consequence, the company stock fell dramatically over the next several months. Also, Netflix saw a loss of at least 800,000 users over that same time period. However, amid the poor stock prices and customer retention, the company saw major increases in revenues. This section will focus on the importance of accurate forecasting and its effects.
Due to the price increase, Netflix saw a 3.3% decrease in subscribers in Q3 this year. Although this seems like a major concern, Revenues are up 48.6% in the last year, nearly half of which has seen the new pricing policy. Also, Netflix has seen an increase of 1013% in the last year, and a 41.6% increase in domestic subscribers in the last year total. In that time period Net Income grew 64.6%, which is very impressive considering other measures of performance seemed very poor. These figures are all fairly significant when you once again consider the upheaval amongst customers that reverberated over the internet and by word of mouth.
However, this customer retaliation has not completely bottomed out. Although figures show that customer losses are slowing, they are still decreasing. Although some financial performance figures are up, Netflix management has openly admitted they have made a mistake in their new scheme. Although they did forecast a loss of subscriptions, they did not expect the losses to be so prolific so quickly. In that regard, it will be interesting to see what happens to profits over the next few business quarters. Another area that has been negatively effected by the pricing change has been the company stock. In July of 2011 stock was at a high of nearly 300 per share, and beginning December 2011 stocks were at a near bottom 67 per share.
Here are some key points from this example:
>Netflix saw many subscribers cancel their service in the past year, yet profits are up from a year ago but down in the last quarter
>As Revenues have risen, stocks have fallen significantly
>Price jumps caused more than expected cancellations which effects the profitability equation
Michael Bayes response to the Time Warner case Memo 6
Baye starts his response to the memo by analyzing the estimation of linear demand ( Q = a + BP + e).
From the regression output, we are able to locate the model coefficients ( a = intercept coefficient and B = the price coefficient). After locating these coefficients from the Anova table, we see the demand function as
Q = 1.9711 + 0.1075P.
The inverse of this demand function is found by solving for P which yields
P = 18.3358 - 9.3023Q.
From here, Baye finds the Marginal Revenue from the linear inverse demand function by simply doubling the slope. This gives our marginal revenue function
MR(Q) = 18.3358 - 18.6046Q.
From here, we need to figure out the marginal cost so that we can find the price and quantity combination that will allow us to maximize our profits. We can start to estimate the marginal cost with the following regression model
C(Q) = a + BQ + e.
From the regression output we are able to locate the model coefficients (a = intercept coefficient and B = the output coefficient). After locating these coefficients from the Anova table, we see the cost function as
C(Q) = 0.0014 + 5.50Q.
This means that the marginal cost is $5.50.
We can now find the profit maximizing output by setting marginal revenue and marginal cost equal to each other; MR(Q) = MC >> 18.3358 - 18.6046Q = 5.50. The profit maximizing output will be Q = 0.6899, or roughly 690 subscribers.
To find the profit maximizing price, we simply plug in our coefficient of Q into the inverse demand function; P = 18.3358 - 9.3023(0.690) = 11.92. Therefore the profit maximizing price is $11.92.
Finally, based on the data we just found, we can estimate the increase in monthly profits at this new price and output. This is done by subtracting last months profits from the current month which will look like; [(11.92 x 690) - (1.2 + 5.5 x 690)] - [(10.50 x 852) - (1.2 + 5.5 x 852)] = 169.8 or $169,800.
This example from Baye is the basis of how many researchers estimate profits based on pricing. The process is very helpful for all levels of an organization. This analysis is helpful to business managers looking for their the correct course of action, to the accounting department for obvious reasons, and to the marketing department to assist them with their promotions planning.
Review Questions
1. Profits are:
a.) A good source of finance for a firm
b.) A good measure of business success
c.) Excess revenues after accounting for all associated costs
d.) All of the Above
2. In order to find the profit maximizing price/quantity, we need
a.) Marginal Cost and Marginal Revenue
b.) Earnings Per Share
c.) Stock Price
d.) All of the Above
3. In a monopoly, when elasticity does not equal 1
a.) Profits are maximized
b.) Profits are not maximized
c.) Marginal Revenue equals 0
d.) All of the Above
4. When Marginal Cost is greater than Marginal Revenue
a.) We should produce more
b.) Producing more units will add more to Total Revenue than Total Cost
c.) We should produce less
d.) All of the Above
5. A decrease in amount of goods sold
a.) Will always decrease profits
b.) Will never decrease profits
c.) Will increase or decrease profits depending where you are relevant to the profit maximization point
d.) None of the Above
Collin Hornbaker
Wiki Final Paper
What is Profit?
Profit is defined as any revenues that exceed the cost of inputs as well as the fixed costs associated with the firm. Profits are regularly regarded as the best source of finance for a firm. For that reason, Profits are regarded as one of the best measures of success when reviewing a business. Regular inputs in calculating Profits are : Quantity Sold, Variable Costs, Fixed Costs, and the variable we will take a closer look at, Price.Calculating Profit Maximization
For the purposes of this discussion, we will be taking a look at how to maximize profits based on changing price. To do so, we need to first find the Marginal Revenue function. From there, we need to find the Marginal Cost function. After Marginal Revenue and Marginal Costs functions are know, we need to then set them equal to each other to find the optimum quantity by solving for Q. To then find the optimum price for profit maximization, we will then plug in the optimum quantity to the inverse demand function and solve for P. In this case, P will be the most effective price for maximizing Profit. From here, we can find profit by multiplying the price and quantity we just found less the costs associated with the product and firm.Possible Effects of Price Change
The average person (not an economist in this case) might think that to increase profits, they could simply increase the price to make more profit. However, one look back at a simple Supply and Demand graph, specifically the Demand side, will generally show that as price increases, demand will decrease. This means that as you increase your price, fewer people will buy your good or service. However, it really depends on which side of the optimum price you are on to calculate the impact on profits.If your price is too low, more people will demand more products but you will not be charging a price that could generate enough marginal revenue to equal the amount of profits that a higher price will yield. In an attempt to increase marginal revenue you increase the price. However, if you increase it past the optimum point, you will actually begin to see negative returns on revenue the more price increases. Therefore, in order to be as profitable as possible (which we pointed out is a major measure of success for business), we must strive to find the optimum price that will yield a quantity that will maximize profits for a firm.
Monopolies and Profit Maximization
As many of us know, monopoly could mean an extremely frustrating board game where the banker is a cheating thief, a chance to win free hash browns at McDonalds, or a single producer of a product or service with no close substitutes. Because the previous are outside this forum, we will look at the latter form of monopoly. As a monopoly is the sole producer of a product/service, one might think that a monopoly can simply increase their pricing at will because customers are forced to buy it from them or not buy it at all. Although it is true that a monopoly is a price setter rather than a price taker, they too must run the numbers on pricing to find the optimum point for profit maximization. This is because, at a certain point, like with all pricing strategies, pricing can have negative impacts on profits.Like with all demand, when a monopolists raises prices demand will generally fall. However, this is not the main concern as we noted earlier. In terms of profit maximization, we are more interested in marginal revenue and marginal cost. Let us first examine marginal cost. The value of marginal cost is determined by the effect of price on the quantity demanded. If this sounds a lot like elasticity, that is because it is elasticity of demand. The following table shows the effect on marginal revenues concerning elasticity of demand.
To produce at an optimum point where profits are at there maximum, we must examine marginal revenue and marginal cost together. The following table can give some guidance on how to price and produce in given situations concerning marginal revenue and marginal cost.
In the case of the monopolists, they will generally produce less than the socially efficient output and charge a higher price because of it. For the most part, the formula for calculating profit maximization is much the same for monopolists. The advantage they have over other market structures is there price maker ability. This allows the firm to be able to work on pricing schemes and take out the variables that are associated with competition that would have other effects on the ability to accurate forecast the models associated with profit maximization.
Perfect Competition and Profit Maximization
In a perfectly competitive market, we have some given characteristics. Firms can freely enter and exit the market, goods are very similar (individual firms have elastic demand), and due to the amount of buyers and sellers, individual firms are price-takers (that is, they set their prices equal to the industry standard). As we are focusing on pricing effects on profits, we will examine how these firms can maximize profits with little or no control over price.In a perfectly competitive market we see that a firm must pick a price consistent with the market. Therefore, to identify the profit maximization point, we simply need to know the marginal cost because marginal revenue is already given as the industry constant demand. When we arrive at the point where marginal cost equal marginal revenues, as always, we will see profit maximization. The graph below pertains to this previous concept in the short-run only.
Although we see it is possible maximize profits in the short-run, given the constraints of the market structure, the fact remains that in perfect competition it is impossible to make an economic profit in the long-run. This is because others will see the profits being made, and with no barriers to entry, they will enter in to the industry. As more firms enter the market, we will see higher industry production which by economic law will drive down prices. This price decrease will lead to a decrease in revenues until firms are pushed out of the industry as prices sink below firms costs. The following graph demonstrates a perfectly competitive market in the long-run.
As we have seen, a firm is able to still maximize profit, even as a price-taker, at least in the short-run. It is all a matter of the conditions in the market and marginal revenue/cost. It is very possible for a firm to maximize profit, given their situation, in the long-run if the market is not perfectly competitive. This is good news for business because we know that it is impossible to have a perfectly competitive market structure.
A Real World Example: Cancer Drug that Few Can Afford
A few years ago, the pharmaceuticals market encountered a phenomenon that many did not understand. A pharmaceutical company, Genetech, created and were FDA approved to use an existing drug on new conditions. The drug Avastin was widely used as a treatment of colon cancer was now approved to assist in treatment in specific breast and lung cancer patients. One would assume this is great news in the field of cancer treatment. Though it is great news in the fight against cancer, it came at a price. That price was a 50% increase for the new treatment option patients. This caused many patients and doctors alike to be in a frenzy. Many attacked the price citing that a majority of the public could not afford the new drug at that price point.Although it is unfortunate that a majority of patients that qualify for this drug cannot afford to pay for it, there is still a market of patients who can and do pay for the drug. It is certain that Genetech saw a change in the market (customer base expansion due to new treatment options) and figured a new profit maximization pricing strategy accordingly. This means that the expansion causes a greater demand in the market. If Genetech were to satisfy the market for Avastin, they most likely would be at a price quantity combination that different than the optimum combination. Accordingly, Genetech placed the price tag that was most likely to get the firm maximum profits, or as close as possible. In this case, it happens that the optimum combination consist of extremely high prices, and extremely low quantities, as compared with the market demand. This point backed by a statement from an executive at Roche Pharmaceuticals, majority owner of Genetech. William Burns, Chief executive at Roche Pharmaceuticals, stated in regard to exorbinant prices of Avastin and another of the companies other cancer drugs, "As we look at Avastin and Herceptin pricing, right now the health economics hold up, and therefor I don't see any reason to be touching them." This is a pretty clear statement that they are fulfilling their economic/financial initiatives (profits in this case) so why change? Clearly, from a business perspective, it is agreeable that a firm must set prices that benefit the companies well-being. Genetech, in this situation, is simply trying to use their financial and market models to achieve their financial goals (which is profit maximization). From a business perspective, this case is fascinating and very intriguing. From an ethical or even just human perspective, this case is uphauling and frustrating. However, this is just another case of ethical gray areas in business that we must deal with everyday.
A Real World Example: Netflix Pricing Wins and Losses
Back in mid 2011, Netflix made public their new pricing scheme that would separate their online content and DVD delivery into separate business units and increase the total cost of both by nearly 50%. As a consequence, the company stock fell dramatically over the next several months. Also, Netflix saw a loss of at least 800,000 users over that same time period. However, amid the poor stock prices and customer retention, the company saw major increases in revenues. This section will focus on the importance of accurate forecasting and its effects.Due to the price increase, Netflix saw a 3.3% decrease in subscribers in Q3 this year. Although this seems like a major concern, Revenues are up 48.6% in the last year, nearly half of which has seen the new pricing policy. Also, Netflix has seen an increase of 1013% in the last year, and a 41.6% increase in domestic subscribers in the last year total. In that time period Net Income grew 64.6%, which is very impressive considering other measures of performance seemed very poor. These figures are all fairly significant when you once again consider the upheaval amongst customers that reverberated over the internet and by word of mouth.
However, this customer retaliation has not completely bottomed out. Although figures show that customer losses are slowing, they are still decreasing. Although some financial performance figures are up, Netflix management has openly admitted they have made a mistake in their new scheme. Although they did forecast a loss of subscriptions, they did not expect the losses to be so prolific so quickly. In that regard, it will be interesting to see what happens to profits over the next few business quarters. Another area that has been negatively effected by the pricing change has been the company stock. In July of 2011 stock was at a high of nearly 300 per share, and beginning December 2011 stocks were at a near bottom 67 per share.
Here are some key points from this example:
>Netflix saw many subscribers cancel their service in the past year, yet profits are up from a year ago but down in the last quarter
>As Revenues have risen, stocks have fallen significantly
>Price jumps caused more than expected cancellations which effects the profitability equation
Michael Bayes response to the Time Warner case Memo 6
Baye starts his response to the memo by analyzing the estimation of linear demand ( Q = a + BP + e).From the regression output, we are able to locate the model coefficients ( a = intercept coefficient and B = the price coefficient). After locating these coefficients from the Anova table, we see the demand function as
Q = 1.9711 + 0.1075P.
The inverse of this demand function is found by solving for P which yields
P = 18.3358 - 9.3023Q.
From here, Baye finds the Marginal Revenue from the linear inverse demand function by simply doubling the slope. This gives our marginal revenue function
MR(Q) = 18.3358 - 18.6046Q.
From here, we need to figure out the marginal cost so that we can find the price and quantity combination that will allow us to maximize our profits. We can start to estimate the marginal cost with the following regression model
C(Q) = a + BQ + e.
From the regression output we are able to locate the model coefficients (a = intercept coefficient and B = the output coefficient). After locating these coefficients from the Anova table, we see the cost function as
C(Q) = 0.0014 + 5.50Q.
This means that the marginal cost is $5.50.
We can now find the profit maximizing output by setting marginal revenue and marginal cost equal to each other; MR(Q) = MC >> 18.3358 - 18.6046Q = 5.50. The profit maximizing output will be Q = 0.6899, or roughly 690 subscribers.
To find the profit maximizing price, we simply plug in our coefficient of Q into the inverse demand function; P = 18.3358 - 9.3023(0.690) = 11.92. Therefore the profit maximizing price is $11.92.
Finally, based on the data we just found, we can estimate the increase in monthly profits at this new price and output. This is done by subtracting last months profits from the current month which will look like; [(11.92 x 690) - (1.2 + 5.5 x 690)] - [(10.50 x 852) - (1.2 + 5.5 x 852)] = 169.8 or $169,800.
This example from Baye is the basis of how many researchers estimate profits based on pricing. The process is very helpful for all levels of an organization. This analysis is helpful to business managers looking for their the correct course of action, to the accounting department for obvious reasons, and to the marketing department to assist them with their promotions planning.
Review Questions
1. Profits are:a.) A good source of finance for a firm
b.) A good measure of business success
c.) Excess revenues after accounting for all associated costs
d.) All of the Above
2. In order to find the profit maximizing price/quantity, we need
a.) Marginal Cost and Marginal Revenue
b.) Earnings Per Share
c.) Stock Price
d.) All of the Above
3. In a monopoly, when elasticity does not equal 1
a.) Profits are maximized
b.) Profits are not maximized
c.) Marginal Revenue equals 0
d.) All of the Above
4. When Marginal Cost is greater than Marginal Revenue
a.) We should produce more
b.) Producing more units will add more to Total Revenue than Total Cost
c.) We should produce less
d.) All of the Above
5. A decrease in amount of goods sold
a.) Will always decrease profits
b.) Will never decrease profits
c.) Will increase or decrease profits depending where you are relevant to the profit maximization point
d.) None of the Above
Answers
1.) d 2.) a 3.) b 4.) c 5.) cReferences
Ashley, C. A. "Maximization of Profit." The Canadian Journal of Economics and Political Science February 1961: 91-97. http://www.jstor.org/stable/139400?origin=JSTOR-pdf.Baye, Michael. Managerial Economics and Business Strategy (7th edition). New York City: McGraw-Hill/Irwin, 2010.
Berenson, Alex. "A Cancer Drug Shows Promise, at a Price Many Can't Pay." 15 February 2006. NYTimes.com. http://www.nytimes.com/2006/02/15/business/15drug.html?_r=1&oref=slogin.
Brohan, Mark. "Despit Lots of Angry Subscribers, Netflix Grew in Revenue in Q3." 24 October 2011. InternetRetailer.com. http://www.internetretailer.com/2011/10/24/despite-lots-angry-subscribers-netflix-grew-revenue-q3.
Enke, Stephen. "Profit Maximization under Monopolistic Competition." The American Economic Review June 1941: 317-326. http://www.jstor.org/stable/362?origin=JSTOR-pdf.
"Micro Competition." 2011. ThinkQuest.org. http://library.thinkquest.org/C004323/low/micro2.html.
"Monopoly Companies ." 2011. BasicEconomics.info. http://www.basiceconomics.info/monopoly-companies.php.
Wnders, John T. "What is Profit Maximization." Journal of Economic Issues September 1972: 61-66. http://www.jstor.org/stable/4224142?origin=JSTOR-pdf.