Chapter 92
Nonlinear pricing
Questions answered in this chapter:
How can bundling increase profitability?
How can I find a profit-maximizing nonlinear pricing plan?
Chapter 90, “Pricing products by using tie-ins,” and Chapter 91, “Pricing products by using subjectively determined demand,” showed you how to determine a profit-maximizing price for a product. The examples in those chapters assume 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. As you will see in this chapter, nonlinear pricing can often greatly increase a company’s profit.
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