Premium
Multi‐unit pricing
Author(s) -
McCan Bryan C.
Publication year - 2009
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.1449
Subject(s) - unit (ring theory) , marginal cost , unit price , economics , homogeneous , microeconomics , division (mathematics) , average cost pricing , unit cost , pricing schedule , econometrics , rational pricing , mathematics , capital asset pricing model , mathematics education , arithmetic , combinatorics
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.