Chapter 84. Pricing products by using tie-ins
Question answered in this chapter:
How does the fact that customers buy razor blades as well as razors affect the profit-maximizing price of razors?
Certain consumer product purchases frequently result in the purchase of related products, or tie-ins. Here are some examples:
Original purchase | Tie-in product |
|---|---|
Razor | Razor blades |
Men’s suit | Shirt and/or tie |
Personal computer | Software training manual |
Video game console | Video game |
Using the techniques described in Chapter 83 it’s easy to determine a demand curve for the product that’s originally purchased. You can then use the Microsoft Excel Solver to determine the original product price that maximizes the sum of the profit earned from the original and the tie-in products. ...
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