Affine Pricing Calculator
Answers the Question
How much revenue will a product with fixed and variable pricing generate?
Calculator for Affine Pricing
What Is the Affine Pricing?
When it comes to price, most people think about variable costs.
Many products are sold at a given price per unit. For instance, two bottles of soda will usually cost twice as much as one bottle of soda.
Of course some products feature fixed prices. An all-you-can-eat restaurant will charge one fee, no matter how much you can consume.
There's actually a third way that is more common that one might think: a combination.
Utilities, such as electricity work this way. A monthly fee (service charge) is assessed, and then an additional fee is used, based upon consumption.
Why Is it Important?
- Some products are billed by both fixed and variable measures, so just examining one or the other could lead to an underestimate of revenue.
Formula(s) to Calculate Affine Pricing
- TOTAL PRICE = PER UNIT PRICE * QUANTITY + FIXED COST
Common Mistakes
- Under- or overestimating the quantity consumed.
- Utilizing this method when monitoring costs are high.
- Confusing customers with a complex billing formula.
- Selecting a fixed cost that is so high that it scares off potential customers.
- Selecting a variable cost that is so low that it convinces buyers to resell the offering on a secondary market.