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?
In Chapter 69 and Chapter 70, I showed how to determine a profit-maximizing price for a product. We made the implicit assumption, however, 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 (cost of x units = (unit price)*x). We will see in this chapter that nonlinear pricing can often greatly increase a company’s profit.
A nonlinear pricing scheme simply ...