TWO-PART PRICING Service firms engage in two-part pricing, consisting of a fixed fee plus
a variable usage fee. Cell phone users pay a minimum monthly fee plus charges for calls that exceed
their allotted minutes. Amusement parks charge an admission fee plus fees for rides over a certain
minimum. The service firm faces a problem similar to captive-product pricing—namely, how
much to charge for the basic service and how much for the variable usage. The fixed fee should be
low enough to induce purchase; profit can then come from the usage fees.