Two Part Tariff And Relation to Unbundling

Two part pricing is another form of price discrimination,

A two-part tariff is a price discrimination technique in which the price of a product or service is composed of two parts - a lump-sum fee as well as a per-unit charge.

The seller sets an "entry fee" to get into the store and sells items withn in the store separately. Once inside the store, the customer decides whether or not to purchase items at listed prices and the amount to buy. For a rational cutomer, once the subscription fee is paid, it is sunk and should have no impact on the decision to buy other goods or not.

A profit maximizing seller will set the price of goods sold at or above their marginal cost. The fixed subscription fee or entry fee is targeted to capture the consumer surplus. There is some parallel to between two-part tariff and airline baggage fees scheme. The list price for the ticket can be looked  at as the entry fee and the itemized charges for meals and baggage are the second part.

The traveler has the option of whether or not purchase the plane ticket at the set price (the entry fee).  When they show up to the airport they have the option of purchasing additional items like, better seat in the same class, baggage check-ins. Once inside the plane, they have more options like meals and drinks.

When looked along this dimension, current Airline price unbundling does look like two part tariff. The key is that airline is able to unbundle what used to be one service into multiple recognizable components.