Tag: bundling

Schitt’s Creek — Christmas Demand & Price Discrimination

The Roses are trying to buy a last-minute Christmas tree, but they’ve come to realize their options are limited. The shop owner knows demand has recently been higher because there aren’t a lot of trees available in the store. Raymond finds that the prices are higher than he was expecting and decides to leave.

The shop owner takes a few creative approaches to selling trees, including bundling air fresheners with purchase and offering a discount if people buy two trees. Price discrimination is a popular tool to increase output for a firm and sell products to people across the demand curve.

Thanks to James Tierney for the submission:

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Life in Pieces — Unbundling the Shoes

 

At their family garage sale, John tries to sell a pair of shoes as separate items. By unbundling the items, he offers one shoe for 50 cents, but the second shoe as $10. He almost gets tricked when the shopped is buying the shoes for her husband who only has one leg, but John tries to quickly back-peddle. This form of price discrimination is the opposite of a bulk discount.

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The Chi — Price > Marginal Cost

Coogie Johnson rides up to the corner store to get a grape pop and beef jerky. Habib, the store owner, tells him it’s $1.00 for the soda and $1.75 for the jerky. Coogie then tries to talk Habib down to letting him pay $0.25 for soda and pay full price for the jerky to which his son nodded in approval. Even though the retail price for the soda and the jerky are $1.00 and $1.75, respectively. Coogie knows that the soda is priced well above the marginal cost and attempts to negotiate the price down closer to the marginal cost. Habib argues that it’s not fair to charge him a different price than other customers, but the son recognizes that some profit is better than no profit and agrees to sell it to Coogie at a lower price.

Thanks to Kyle Davis for the reference.

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Always Sunny: One Rock

Dennis and Dee are trying to buy a crack rock in order to manipulate the welfare system, but they aren’t really sure of the cost of a crack rock. When they approach a street dealer, he quickly realizes that the two clients aren’t well informed and he can earn a bit of extra profit by charging them a higher price. Luckily for him, they agree.

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