Does marginal-cost pricing work better for some product than for others?
In the previous example, fixed costs are R100, which is relatively low. As a result, a break-even price for 800 units sold domestically is 62,5 cents per unit; for 100 export units at marginal-cost pricing, it is 60 cents per unit - only 2,5 cents less than the domestic break-even price.
However, where fixed costs are relatively high, the situation is different
Fixed costs = R500
Variable costs = R50 per 100 units for domestic market
= R60 per 100 units for export market
Break-even pricing on 800 units for domestic sale:
Fixed costs = R500
Variable costs = R400
Total costs = R900
Domestic price = R900 / 800
R1,12
Marginal-cost pricing on 100 units for export
= R60 / 100
= 60 cents (This is 52 cents below the domestic break-even price.)
This illustrates that marginal-cost pricing is more effective for products with high fixed costs than for those with low fixed costs.