General Info about Flat Rates

Flat rates are pricing structures that offer a single fixed fee for a service regardless of how often the service is used. For one fixed price, a consumer can use the service as often as he wishes without fear of being charged extra for “too much” use. Flat rates are popular with consumers who want to save money over “A La Carte” pricing that forces consumers to pay for each use of the service. Flat rates are also popular with businesses who want to improve both their profit margins and their returns on investments.

They are commonplace in most countries that allow free competition among companies offering services to consumers. For many years, this was not the case. Businesses had limited access to flat rates because there were serious questions about their use. On one hand, businesses had serious doubts about the effectiveness of flat rates. There was not enough information about how flat rates worked to justify their widespread use. Furthermore, many US government agencies had concerns about their widespread use, too. Many officials wondered if flat rate pricing structures were legal to use in a free market setting. For many years, courts tried to decide the legal status of flat rates. It was not until the late 1990’s-early 2000’s that the courts decided flat rates could be used widely in an open market. This decision allowed some innovations in the use of flat rates that have allowed business to offer more to consumers.

Flat rates are now used to sell a wider variety of services to consumers. Businesses are now selling services on a flat-rate basis that used to be unprofitable or impossible to sell on a flat rate basis. It is also possible to sell services that have a diminishing marginal rate of utility online spiele kostenlos to consumers on a flat rate basis. These services tend to have lower profit margins and lower returns on investment when sold “A La Carte.” Flat rate pricing has allowed businesses to increase the profit margin on these services to give them more incentive to produce these services.

Flat rates also have several advantages for consumers. Flat rates allow consumers to select the amount of services they need without having to pay the extra “A La Carte” price for the privilege. Flat rates also allow consumers to gain access to some services that are impossible to obtain otherwise. Who ever heard of buying just one volt of electricity or just one minute of cell phone time?! Flat rates also protect consumers from purchasing “too little” or “too much” of a service. Consumers can buy just what they need without worrying about sacrificing value or utility in their choices.

Flat rates also allow consumers more variety and choice in the types of services available to them. It used to be that consumers had to accept some services (like cable TV) at face value. Flat rate pricing allows consumers to choose what they want to consume in an efficient manner that a la carte pricing fails to deliver.

Now that we know something about what flat rates are and what they do, let us explore some of the industries that use flat rates extensively. In the next sections, we will learn how telephone companies, internet providers, contract laborers, utlity providers and logistics services providers use flat rates in their industries. Finally
we will also see how they use flat rates to deliver better value to their customers while also improving their bottom lines.