Nonlinear pricing

A non-linear scale determines the price of a product or service in a pricing technique known as non-linear pricing. As stated differently, the relationship between the quantity of a product or service ordered and its price is not linear. When there are fixed production costs, as there are with manufactured goods, this pricing strategy is frequently employed. By providing discounts for larger purchases, non-linear pricing can also be utilized to entice clients to buy more of a good or service.A pricing approach known as non-linear pricing occurs when the cost of a good or service is not based on how much of it is bought. This implies that a variety of factors, including availability, production costs, and demand, can greatly affect a product or service's price. Non-linear pricing can be used to deter clients from making excessive purchases or to entice them to buy more of a good or service.Example:Dynamic pricing is one type of non-linear pricing. This strategy modifies pricing in accordance with supply and demand. For example, an online retailer may decide to raise a product's price when demand is strong and drop it when demand is weak. This maximizes revenue while assisting the business in striking a balance between supply and demand.Benefits and Drawbacks of Non-Linear PricingBenefits:• Customers can be persuaded to buy a product at off-peak hours when demand is lower by using non-linear pricing. This can assist companies in making better use of their capabilities and resources.• Non-linear pricing can also be used to encourage customers to buy a product in larger quantities, which can help the company take advantage of economies of scale.• Non-linear pricing occasionally results in higher sales for the company if consumers are prepared to pay extra for the product's perceived value or convenience.Cons:• Customers may not be aware of the various price points for different times or quantities of the product, which makes non-linear pricing perplexing. Frustration and a decline in consumer satisfaction could result from this.• If non-linear pricing is not correctly controlled, clients may purchase at off-peak hours or in bigger quantities than the business had planned, which could result in diminished profitability for the business.