A company sells two products: A and B. Product A sells for $50 and Product B for $75. If the company sells 100 units of Product A and 60 units of Product B, what is the total revenue? - Redraw

Understanding the Context

Product strategies that pair lower-cost essentials with premium add-ons are gaining momentum, especially amid economic uncertainty and high household budget scrutiny. Consumers seek choice and affordability balanced by quality, and offering both A ($50) and B ($75) allows companies to meet diverse needs. The $25 price gap isn’t arbitrary—it reflects strategic positioning: Product A serves as an entry point, while Product B represents a scaled-up value proposition. This trend aligns with broader consumer patterns favoring flexibility without sacrificing quality, especially as digital habits push more spending online and mobile-first decision-making grows.

How Does This Pricing Strategy Drive Actual Revenue?

With 100 units of Product A sold at $50 each and 60 units of Product B at $75, the math is straightforward but revealing. The total revenue breaks down cleanly:
100 × $50 = $5,000
60 × $75 = $4,500
Adding these gives a total revenue of $9,500.

This model demonstrates how tiered pricing balances volume and margin. Product A drives high units sold, good for brand reach and accessibility, while Product B boosts revenue per sale, supporting profitability. When combined, this structure reflects a responsive approach to market segmentation—showcasing how small-priced items fuel consistent flow and premium products deliver meaningful returns.

Key Insights

Common Questions About This Pricing Model

Q: Why does Product A cost less than Product B?
The price difference typically reflects production costs, feature sets, or perceived value—Product A is designed to be accessible with essential benefits, while B offers enhanced capabilities at a premium.

Q: Does this pricing affect consumer perception?
When clearly communicated, these price points reinforce transparency. Buyers appreciate knowing that lower costs offer reliable entry points, while higher prices align with added value—and both support customer choice.

Q: Can this strategy scale geographically?
Yes. Successful in US markets, the model adapts well across states with varied income levels. Regional adjustments to pricing or features help maintain relevance without compromising core value.

Opportunities and Realistic Expectations

Final Thoughts

This two-product approach unlocks powerful insights for retailers: segmenting customers by