# Affine Pricing Calculator

## Answers the Question

How much revenue will a product with fixed and variable pricing generate?

## 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.