Microsoft Excel 2013: Data Analysis and Business Modeling

Chapter 84. Pricing products by using tie-ins

Question answered in this chapter:

• How does the fact that customers buy razor blades as well as razors affect the profit-maximizing price of razors?

Certain consumer product purchases frequently result in the purchase of related products, or tie-ins. Here are some examples:

Original purchase	Tie-in product
Razor	Razor blades
Men’s suit	Shirt and/or tie
Personal computer	Software training manual
Video game console	Video game

Using the techniques described in Chapter 83 it’s easy to determine a demand curve for the product that’s originally purchased. You can then use the Microsoft Excel Solver to determine the original product price that maximizes the sum of the profit earned from the original and the tie-in ...