Multipart tariffs constitute another widely practiced technique of nonlinear pricing, under which the price of each unit may vary with the total number of units purchased. To some degree, multipart tariffs can be viewed as an enhancement of the bundling marketing strategy analyzed earlier in Section 4.1. By an enhancement we mean that instead of limiting the pricing strategy to a fixed price for a certain number of goods bundled together in a single package, multipart tariffs consist of a fixed fee and per-unit prices that may vary with the amount consumed.

Multipart tariffs in general, and two-part tariffs in particular, are widely used. Here is a list of examples with which the reader should be familiar:

• Phone companies generally charge a fixed monthly fee for maintaining a line connection and in addition charge for each minute of each phone call.

• Credit card companies charge merchants and often consumers fixed annual fees in additional to per-transaction fees.

• Membership discount retailers, such as shopping clubs, require paying an annual membership fee before consumers are allowed to enter the store (and then pay separately for each item they actually buy).

• Bars and nightclubs tend to collect a “cover” charge in addition to charging for each drink separately.

• Amusement parks tend to charge an entrance fee in addition to charging for each ride separately.

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