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Multi-unit pricing

Author

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  • Bryan C. McCannon

    (Wake Forest University, Winston-Salem, NC, USA)

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.

Suggested Citation

  • Bryan C. McCannon, 2009. "Multi-unit pricing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(2), pages 135-140.
    • Handle: RePEc:wly:mgtdec:v:30:y:2009:i:2:p:135-140
    DOI: 10.1002/mde.1449
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    References listed on IDEAS

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    4. Basu, Kaushik, 1997. "Why are so many goods priced to end in nine? And why this practice hurts the producers," Economics Letters, Elsevier, vol. 54(1), pages 41-44, January.
    5. Conlisk, John, 1988. "Optimization cost," Journal of Economic Behavior & Organization, Elsevier, vol. 9(3), pages 213-228, April.
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