::  Posts  ::  RSS  ::  ◂◂RSS  ::  Contact

Variable Pricing

June 20th, 2013
ideas, money  [html]
Mary sells tasty pizza from her food truck. Charging $2/slice, she always has a long line. A friend points out that charging a bit more would probably mean selling fewer slices, but with the higher price she wouldn't need to sell as many to come out ahead. After some experimentation, Mary finds that $3/slice is where she makes the most money.

Another friend notices that some people are in a hurry and would be willing to pay a premium for pizza now instead of waiting in line. Would there be some way to charge different people differently?

The next morning Mary puts up three signs on the side of the truck: $2, $3, and $5. As people come for pizza she asks them to make three lines, one for each sign, based on how much they want to pay. She tells people she'll serve one person from each line before moving on to the next so no one starves.

The $2 line is long, as it used to be when $2 was the standard price. Some people would rather have pizza sooner than money and wait in the $3 line. At $5 there is no line, but a few people in a hurry use it to walk up and get expensive pizza right away. Mary makes more money, the people who can afford to pay less get cheaper pizza, and the people in a hurry now have an option to trade off time and money.

Comment via: google plus, facebook

Recent posts on blogs I like:

Incoming Gantz-Led Government to Invest in Israel’s Infrastructure

Israel’s incoming prime minister Benny Gantz unveiled an emergency government, to take power following an upcoming confidence vote in the Knesset. The last two MKs required to give Gantz a 61-59 majority, two members of Gantz’s own Blue and White Party wh…

via Pedestrian Observations April 1, 2020

Finding home in the time of coronavirus

Disclaimer: I’m going to say this once. Obviously, I am not happy about the coronavirus’s threat to public health or the economic toll it’s taking. I do not think the existence of this pandemic is good. Just so happens that social distancing and remote wo…

via Holly Elmore March 31, 2020

Massachusetts should shut down immediately

We’ve been running 30x fewer tests than other states, and have been extremely tardy in responding to the Biogen outbreak.

via benkuhn.net March 15, 2020

more     (via openring)

More Posts:


  ::  Posts  ::  RSS  ::  ◂◂RSS  ::  Contact