Chapter 86. 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

This section provides the answers to the questions that are listed at the beginning of the chapter.

What is linear pricing?

Chapter 84 and Chapter 85 show how to determine a profit-maximizing price for a product. In those chapters’ examples, however, the implicit assumption is made that no matter how many units a customer purchases, she 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, ...

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