Tag Archives: pricing

June 7, 2015 · 8:00 am

Odd examples of price discounts

A quick post to share a couple of odd examples of price discounts based on quantity that I recently found:

Mugs prices at the Museum Espace Air Passion.

Mugs prices at the Museum Espace Air Passion.

The advertisement clearly indicates that preferential prices are given from the 3rd mug. Let’s see: the first and second sell for 7€ each. The 3rd one comes for an extra 4€. So far, so good. Then the 4th mug is sold for another 7€… (!?) where is the preferential pricing? The fifth and subsequent mugs come for extra 5€ each. See it graphically below:

Mugs' prices.

Mugs’ prices.

Think of a group of friends wanting to pool their purchase to lower the cost. If three friends had already decided to buy a mug, they would pay 18€, or 6€. If then came a fourth friend saying that she also wanted to join the group to buy a mug cheaper than the single one for 7€, the other 3 would have an incentive to reject her, as they would then have to pay 6.25€…

Let’s see this other example.

Flight prices at the Aeroclub du Sarladais.

Flight prices at the Aeroclub du Sarladais.

It comes from the colleagues at the Aeroclub du Sarladais. Here there are prices for short flight excursions. They offer 3 different flight durations with different prices for 1, 2 or 3 passengers. If more than 1 passenger flies, there is a discount. As there are several options, I prefer to use a table rather than a graphic to show what caught my attention:

Flights prices.

Flights prices.

In this case, in two of the cases, the marginal price to be paid by the 3rd passenger is more expensive than that to be paid by the 2nd passenger (I highlighted them in red). However, the oddity is not so striking as the average price to be paid by 3 passengers is always cheaper than the one to be paid by 2 passengers, thus, there is no economical incentive for 2 friends rejecting a 3rd wanting to join them in the experience of flying (good!).

I also found a more subtle issue with the pricing per minute for the 30 minute flights. Let’s see it with the flights for 1 passenger:

  • 15′ sell for 45€, that is 3€ per minute.
  • 20′ sell for 55€, that is 2.75€ per minute.
  • 30′ sell for 80€, that is 2.67€ per minute.

So far, so good, however, if you look at the marginal prices of the added flight time:

  • 20′-15′ = 5′, for 55€- 45€ = 10€, that is 2€ per minute.
  • 30′-20′ = 10′, for 80€- 55€ = 25€, that is 2.5€ per minute. Why are these minutes more expensive? 🙂

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November 26, 2013 · 8:00 am

Pricing beer in Greece

There is something puzzling that we constantly found in the different restaurants we dined at in Greece: the inconsistent pricing of beer. Or rather, the consistent pricing of it in a different fashion as it is done in other places in the West.

Take a look at the menu below.

You may see that Alpha draft beer is sold in two quantities:

  • 300mL for 2€ and,
  • 400mL, for 3€ euros.

That yields a price of 6.7€/L for the 300mL and a price of 7.5€/L for the 400mL.

Read the previous line again.

Then, who would buy the larger quantity if it is sold at a higher price per litre (12.5% higher)? Normally, one would expect some discount linked to volume. Well, not in Greece with beer :-).

Pricing beer in Greece.

Pricing beer in Greece.

We found restaurants in which the differences in pricing were more striking but only took this picture.

Another puzzling fact which we didn’t record was that for a same beer (say Alpha) in most places they sold the bottled beer cheaper than the drafted one (for a same volume). Again this was surprising, as we normally see draft beer sold cheaper, and there are certainly cost advantages to selling draft beer. But then the difference in pricing strategy versus how it is done in the West could have been explained from the demand side (not the supply) if the Greeks value much more draft beer.

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