Nonlinear pricing

Definition updated on November 2023

How does nonlinear pricing deviate from traditional linear pricing models?

Nonlinear pricing is a pricing strategy where the price is not directly proportional to the quantity purchased. This means the price does not increase or decrease in a straight line based on the amount bought. In simpler terms, the cost per unit can change based on the quantity. For example, while one sneaker might be priced at $100, buying two pairs might not cost the straightforward $200; it could be more or less, depending on the nonlinear pricing model applied. This strategy can be seen in volume discounts, where buying more units results in a lower per-unit cost, or in quantity surcharges, where buying less than a certain quantity incurs a higher per-unit cost. For sneaker resellers, nonlinear pricing can be a tool to incentivize bulk purchases or to create unique pricing models based on customer behaviors, exclusive releases, or special editions. It allows resellers to be flexible and creative in how they structure their prices, which can appeal to different segments of buyers and potentially increase overall sales. This strategy requires a keen understanding of market demand, customer behaviors, and inventory management. While nonlinear pricing can be beneficial for special promotions or for targeting specific customer groups, it's essential to communicate the pricing structure clearly to avoid confusion and maintain trust with buyers.

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