Part A2 · Costs, Margin and Break-even

Marginal Cost and Peak-load Pricing

Marginal cost is the cost of one more unit. On a quiet cell site it is near zero; on a full one it is high, because extra traffic slows everyone.

Marginal Cost and Peak-load Pricing · Illustrated by Hendra Saputra with AI assistanceSelect the illustration to explore it at a larger size.

The idea

Average cost per GB includes the whole network, so it overstates the cost of off-peak traffic and understates the cost of peak traffic. Use price to spread demand: night packs and off-peak bonuses sell capacity that would otherwise sit idle. This is called peak-load pricing. Remember that free data filling a site today forces you to buy capacity later.

Use it thoughtfully

  • Use off-peak offers to sell spare capacity.
  • Avoid free data where sites are already full.
  • Plan for next year's capacity cost of today's free data.

An example

ILLUSTRATIVE EXAMPLE: A night pack gives extra data from midnight to 6 a.m. on quiet sites, while bonus data is withheld in congested evening areas.

A question to try

Where in your network would one more GB cost almost nothing, and where would it cost the most?

A useful framework is a starting point, not a guarantee. Effects vary with the audience, product and situation. Use truthful evidence, respect customer choice, and test the result.

Connect the ideas

Illustration

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