Chapter 82. Nonlinear Pricing

Questions answered in this chapter:

  • What is linear pricing?

  • What is nonlinear pricing?

  • What is bundling, and how can it increase profitability?

  • How can I find a profit-maximizing nonlinear pricing plan?

Answers to This Chapter’s Questions

What is linear pricing?

In Chapter 80, and Chapter 81, I show how to determine a profit-maximizing price for a product. In those chapters’ examples, however, I make the implicit assumption that no matter how many units a customer purchases, the customer is charged the same amount per unit. This model is known as linear pricing because the cost of buying x units is a straight line function of x; namely, cost of x units=(unit price)*x. You will see in this chapter that nonlinear pricing

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