Case Article: Inkjet Printer Pricing
Thin-Yin Leong, Nang-Laik Ma
School of Information Systems, Singapore Management University, Singapore 178902, Republic of Singapore
tyleong@smu.edu.sg, nlma@smu.edu.sg
Abstract
The inkjet printer business had adopted the "bait and hook," also known as the "razors and blades" or "tied-products," business strategy, offering a basic printer product at a very low (possibly below cost) price but charging a highly marked-up price for its proprietary ink cartridge. This case explores the pricing of two interrelated products: the printer and its ink cartridge to maximize the overall profit.
This case is designed as an introductory-level case study that emphasizes the basics of spreadsheet modeling. The learning goals for this case are to improve students' skills of modeling a business problem of this nature, determining the parameters involved, exploring the tradeoffs between different pricing criteria, and analyzing how profit can be affected by variations in the input parameter values such as printer cost, cartridge cost, printer price elasticity, and cartridge-to-printer projected sales ratio.
Key words
tied products pricing; spreadsheet modeling
History
Received: June 2009; accepted: June 2010.
Download the PDFs
Case Article
Case
Teaching Note (visit the Case Teaching Notes and Other Restricted Materials page to download this PDF)
Citation Information
Leong, T.-Y., N.-L. Ma. 2011. Inkjet printer pricing. INFORMS Trans. Ed. 11(3) 132-137. Available online at http://ite.pubs.informs.org/.