• Posts
  • RSS
  • ◂◂RSS
  • Contact

  • Variable Pricing

    June 20th, 2013
    money, ideas  [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:

    What should we do about network-effect monopolies?

    Many large companies today are software monopolies that give their product away for free to get monopoly status, then do horrible things. Can we do anything about this?

    via benkuhn.net July 5, 2020

    More on the Deutschlandtakt

    The Deutschlandtakt plans are out now. They cover investment through 2040, but even beforehand, there’s a plan for something like a national integrated timetable by 2030, with trains connecting the major cities every 30 minutes rather than hourly. But the…

    via Pedestrian Observations July 1, 2020

    How do cars fare in crash tests they're not specifically optimized for?

    Any time you have a benchmark that gets taken seriously, some people will start gaming the benchmark. Some famous examples in computing are the CPU benchmark specfp and video game benchmarks. With specfp, Sun managed to increase its score on 179.art (a su…

    via Posts on Dan Luu June 30, 2020

    more     (via openring)


  • Posts
  • RSS
  • ◂◂RSS
  • Contact