Chapter 88 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. The following table shows 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 I described in Chapter 87, “Estimating a demand curve,” it’s easy to determine a demand curve for the product that’s originally purchased. You can then use Microsoft Excel Solver to determine the original product price that ...
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