Multi-unit pricing

✍ Scribed by Bryan C. McCannon

• Publisher: John Wiley and Sons
• Year: 2009
• Tongue: English
• Weight: 164 KB
• Volume: 30
• Category: Article
• ISSN: 0143-6570
• DOI: 10.1002/mde.1449

✦ Synopsis

Abstract

A price takes the form of a cost for either one unit (single‐unit pricing) or multiple units (multi‐unit pricing). I consider a monopolist selling units of a good to a population of homogeneous consumers to explain why one is preferred to the other. A mental cost arises if the division problem a multi‐unit price causes is done. If marginal utility remains high multiple units are desired. Multi‐unit pricing is preferred since it creates a cost if fewer units are purchased. If utility exhibits strong diminishing returns single‐unit pricing is used to avoid the calculation. Copyright © 2008 John Wiley & Sons, Ltd.