Jims diner is just about to open in memphis, tennessee. however, jim is trying to decide whether he wants to offer coke or pepsi soda products. he determines that, to offer either product, he will have to spend $1500 in sunk costs to purchase and install the appropriate paraphernalia. Ultimately, he chooses to offer coke products and agrees to pay coke 5 cents per ounce of coke sold for the right to use its product. After jim makes the investments specific to his soda choice, coke returns and asks for a fixed (One-time) fee in addition to 5 cents per ounce. What is the most jim should be willing to pay? explain

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Product and Price Bundling

Product and price bundling is used as a marketing strategy by businesses, where complementary products and services are combined and sold as a package deal. This bundled price is usually less than the total price of the individual products if they were to be sold separately. When bundled and sold, each product is sold at a reduced price. Using a price bundling strategy helps increase the average revenue per user and also increases the engagement with the user. This happens as the perceived value of the bundled products is more than the individual products.