{"id":35112,"date":"2026-04-26T21:08:02","date_gmt":"2026-04-26T15:38:02","guid":{"rendered":"https:\/\/blogrevamp.cashfree.com\/?p=35112"},"modified":"2026-04-30T21:09:17","modified_gmt":"2026-04-30T15:39:17","slug":"law-of-diminishing-marginal-utility-definition-diagram-examples","status":"publish","type":"post","link":"https:\/\/blogrevamp.cashfree.com\/law-of-diminishing-marginal-utility-definition-diagram-examples\/","title":{"rendered":"Law of Diminishing Marginal Utility: Definition, Diagram and Examples"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a8f499324701\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #364250;color:#364250\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #364250;color:#364250\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a8f499324701\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/blogrevamp.cashfree.com\/law-of-diminishing-marginal-utility-definition-diagram-examples\/#What_is_the_Law_of_Diminishing_Marginal_Utility\" >What is the Law of Diminishing Marginal Utility?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/blogrevamp.cashfree.com\/law-of-diminishing-marginal-utility-definition-diagram-examples\/#Formula_of_Marginal_Utility\" >Formula of Marginal Utility<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/blogrevamp.cashfree.com\/law-of-diminishing-marginal-utility-definition-diagram-examples\/#How_the_Law_of_Diminishing_Marginal_Utility_Works_in_Practice\" >How the Law of Diminishing Marginal Utility Works in Practice<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/blogrevamp.cashfree.com\/law-of-diminishing-marginal-utility-definition-diagram-examples\/#Real-Life_Examples_of_the_Law_of_Diminishing_Marginal_Utility\" >Real-Life Examples of the Law of Diminishing Marginal Utility<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/blogrevamp.cashfree.com\/law-of-diminishing-marginal-utility-definition-diagram-examples\/#Assumptions_of_the_Law_of_Diminishing_Marginal_Utility\" >Assumptions of the Law of Diminishing Marginal Utility<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/blogrevamp.cashfree.com\/law-of-diminishing-marginal-utility-definition-diagram-examples\/#Why_the_Law_of_Diminishing_Marginal_Utility_Matters_for_Business_and_Pricing\" >Why the Law of Diminishing Marginal Utility Matters for Business and Pricing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/blogrevamp.cashfree.com\/law-of-diminishing-marginal-utility-definition-diagram-examples\/#Limitations_of_the_Law_of_Diminishing_Marginal_Utility\" >Limitations of the Law of Diminishing Marginal Utility<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/blogrevamp.cashfree.com\/law-of-diminishing-marginal-utility-definition-diagram-examples\/#Conclusion\" >Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/blogrevamp.cashfree.com\/law-of-diminishing-marginal-utility-definition-diagram-examples\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\n\n<p class=\"wp-block-paragraph\">There\u2019s something about that first cup of coffee that\u2019s unique compared to your third cup. There\u2019s something different about receiving that first paycheck at a new job when compared to your tenth one. This concept, which states that as the amount of an object received increases, the amount of extra happiness gained from it decreases, is known as the law of diminishing marginal utility.\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It explains some very ordinary consumer behavior with surprising precision. Businesses that understand this principle make smarter decisions about pricing, packaging, and how they communicate value across repeat purchases. The concept sits underneath more pricing and product strategy than most people realise.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Law_of_Diminishing_Marginal_Utility\"><\/span><strong>What is the Law of Diminishing Marginal Utility?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The law of diminishing marginal utility states that as a person consumes more units of the same good or service, the additional satisfaction (marginal utility) gained from each extra unit decreases.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>In simple terms:<\/strong><br>The more you have of something, the less satisfying each additional unit becomes.<\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">This principle is fundamental in economics and plays a key role in understanding consumer behavior, pricing strategies, and demand patterns.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To know the concept clearly, two terms need to be separated: Utility and Marginal Utility. Getting this wrong is what makes the concept feel more confusing than it needs to be. Here is how each term works:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Utility<\/strong><\/td><td><strong>Marginal Utility<\/strong><\/td><\/tr><tr><td>Utility is the satisfaction a consumer gets from an economic act. A hungry person buys a sandwich. That sandwich provides utility because it reduces hunger. The more pressing the need, the higher the utility.<br><\/td><td>The marginal utility of the good refers to the additional satisfaction derived from an additional unit of the good consumed in addition to the amount that has been consumed before. If the same consumer were to buy another sandwich right after consuming the first one, then the additional satisfaction derived from the consumption of the second sandwich would be its marginal utility.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" fetchpriority=\"high\" decoding=\"async\" width=\"770\" height=\"514\" data-attachment-id=\"35118\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/law-of-diminishing-marginal-utility-definition-diagram-examples\/law-of-diminishing-marginal-utility-chart\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/04\/Law-of-diminishing-marginal-utility-chart.png?fit=1536%2C1024&amp;ssl=1\" data-orig-size=\"1536,1024\" data-comments-opened=\"0\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"Law of diminishing marginal utility chart\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/04\/Law-of-diminishing-marginal-utility-chart.png?fit=770%2C514&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/04\/Law-of-diminishing-marginal-utility-chart.png?resize=770%2C514&#038;ssl=1\" alt=\"Law of Diminishing Marginal Utility\" class=\"wp-image-35118\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/04\/Law-of-diminishing-marginal-utility-chart.png?resize=1024%2C683&amp;ssl=1 1024w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/04\/Law-of-diminishing-marginal-utility-chart.png?resize=300%2C200&amp;ssl=1 300w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/04\/Law-of-diminishing-marginal-utility-chart.png?resize=768%2C512&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/04\/Law-of-diminishing-marginal-utility-chart.png?resize=1200%2C800&amp;ssl=1 1200w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/04\/Law-of-diminishing-marginal-utility-chart.png?resize=270%2C180&amp;ssl=1 270w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/04\/Law-of-diminishing-marginal-utility-chart.png?resize=770%2C515&amp;ssl=1 770w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2026\/04\/Law-of-diminishing-marginal-utility-chart.png?w=1536&amp;ssl=1 1536w\" sizes=\"(max-width: 770px) 100vw, 770px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Formula_of_Marginal_Utility\"><\/span>Formula of Marginal Utility<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Marginal utility can be calculated using the following formula:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>MU = Change in Total Utility \/ Change in Quantity<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This formula helps businesses and economists measure how consumer satisfaction changes with each additional unit consumed.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>Also read: <a href=\"https:\/\/www.cashfree.com\/blog\/swot-analysis-in-business\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">SWOT Analysis in Business: Examples &amp; Step-by-Step Guide<\/mark><\/a><\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_the_Law_of_Diminishing_Marginal_Utility_Works_in_Practice\"><\/span><strong>How the Law of Diminishing Marginal Utility Works in Practice<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The law works because consumers prioritise their most urgent needs first. When someone is very thirsty, the first bottle of water carries high value. As thirst falls, the second bottle still helps but matters less. By the third or fourth, the additional value shrinks significantly. The good itself has not changed. The consumer&#8217;s need has. That shifting intensity is what drives diminishing marginal utility.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The following are the practical mechanics of how the law operates:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>As marginal utility falls, consumers become less willing to pay the same price for additional units<\/li>\n\n\n\n<li>Businesses that price all units identically are often mispricing relative to the actual perceived value<\/li>\n\n\n\n<li>Volume discounts, tiered packages, and bundled offers are direct pricing responses to declining marginal utility<\/li>\n\n\n\n<li><a href=\"https:\/\/www.cashfree.com\/blog\/top-subscription-management-software\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">Subscription models<\/mark><\/a> face this challenge sharply because customers stop seeing value in features they never use<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Real-Life_Examples_of_the_Law_of_Diminishing_Marginal_Utility\"><\/span>Real-Life Examples of the Law of Diminishing Marginal Utility<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This law comes into play in real-life instances where individuals experience it frequently. Economic concepts tend to make sense when explained through practical examples. The following are the common examples provided:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Glasses of water following intense workout sessions:<\/strong> The first glass provides more satisfaction since it meets a basic physiological requirement. However, the second glass provides some benefits, yet there isn\u2019t much satisfaction gained by taking another glass, especially if you drink three glasses.<\/li>\n<\/ol>\n\n\n\n<ol start=\"2\" class=\"wp-block-list\">\n<li><strong>Food consumption:<\/strong> The first slice of pizza satisfies hunger directly and tastes best because the need is greatest. Each subsequent slice delivers less added satisfaction. By the fourth or fifth slice, the marginal utility may be very low or even negative.<\/li>\n<\/ol>\n\n\n\n<ol start=\"3\" class=\"wp-block-list\">\n<li><strong>Repeated experiences:<\/strong> A person attending three concerts by the same artist in the same month may enjoy each one, but the excitement and added satisfaction from each extra show tend to fall. The experience does not change, but the novelty and urgency of the want do.<\/li>\n<\/ol>\n\n\n\n<ol start=\"4\" class=\"wp-block-list\">\n<li><strong>Money and spending:<\/strong> The satisfaction from the first rupee of income or spending does not always translate proportionally to each additional rupee. This is why the same amount of money means more to a person with fewer resources than to one with far more. In personal finance, smarter allocation often matters more than higher quantity alone.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>Also read: <a href=\"https:\/\/www.cashfree.com\/blog\/what-is-capital-structure\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">What is Capital Structure? and How It Works in Business<\/mark><\/a><\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Assumptions_of_the_Law_of_Diminishing_Marginal_Utility\"><\/span>Assumptions of the Law of Diminishing Marginal Utility<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The law applies cleanly only under certain conditions. Most economic principles carry assumptions, and this one is no different. Understanding the assumptions helps apply the concept accurately rather than expecting it to hold in every situation. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here are the standard assumptions:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Units consumed must be similar or homogeneous in quality and type<\/li>\n\n\n\n<li>Consumption must be continuous or reasonably close in time, without large gaps between units<\/li>\n\n\n\n<li>The consumer&#8217;s tastes, income, and preferences remain unchanged during the period of consumption<\/li>\n\n\n\n<li>The product is consumed in standard units rather than arbitrarily sized portions<\/li>\n\n\n\n<li>The good must be capable of satisfying the same type of want more than once<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_the_Law_of_Diminishing_Marginal_Utility_Matters_for_Business_and_Pricing\"><\/span><strong>Why the Law of Diminishing Marginal Utility Matters for Business and Pricing<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This is where the concept moves from an economics textbook into everyday business decisions. If consumers value the first unit more than later units, businesses cannot assume that offering more quantity creates proportionally more value. Pricing and product design both need to account for falling marginal utility.\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The following are the business implications:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Business Area<\/strong><\/td><td><strong>How Diminishing Marginal Utility Applies<\/strong><\/td><\/tr><tr><td>Pricing strategy<\/td><td>Price per unit often needs to fall across higher quantities to match declining perceived value<\/td><\/tr><tr><td>Product bundling<\/td><td>Bundles must be designed so added items still feel worthwhile, not like padding<\/td><\/tr><tr><td>Subscription tiers<\/td><td>Feature sets should match actual usage patterns, not just maximum possible quantity<\/td><\/tr><tr><td>Upselling<\/td><td>Additional offers need to solve a new or different problem rather than repeat the same value<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.cashfree.com\/blog\/rise-of-subscription-pricing-model\/\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">For subscription businesses<\/mark><\/a>, the lesson is direct. More features do not automatically create more satisfaction if customers are not actively using them. Value comes from relevance and timing rather than sheer quantity. A product that solves the most urgent problem well will hold perceived value longer than one that offers many solutions to problems the customer does not have.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Limitations_of_the_Law_of_Diminishing_Marginal_Utility\"><\/span><strong>Limitations of the Law of Diminishing Marginal Utility<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The law holds great significance for practical use, but there are certain limitations involved with it that need to be considered. The following are some examples where the law is not applicable:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Collectibles and luxury goods:<\/strong> For certain categories, owning more units can increase rather than decrease desire. A person collecting limited-edition items may value the tenth piece as highly as the first because rarity, status, and social meaning drive the utility rather than the functional satisfaction of the good itself.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Network-driven products:<\/strong> In products where value grows with the number of users or connections, such as communication platforms or professional networks, additional use can increase rather than decrease utility for the individual. This runs counter to the standard assumption of the law.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Time gaps between consumption:<\/strong> If enough time passes between units, the intensity of want can reset. A second coffee five minutes after the first may add little value. A coffee the following morning can again feel highly satisfying. The law is generally framed around continuous or reasonably close-in-time consumption, so large time gaps change the analysis.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The law of diminishing marginal utility explains a simple yet powerful truth: more is not always better. As consumption increases, satisfaction decreases, making it essential for businesses to focus on:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Value over volume<\/li>\n\n\n\n<li>Relevance over quantity<\/li>\n\n\n\n<li>Timing over repetition<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Companies that understand this principle can design better pricing, smarter products, and stronger customer experiences.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Want to align your payments with real customer behavior? <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/www.cashfree.com\/one-click-checkout\/\">Cashfree Payments helps businesses optimize checkout experiences<\/a>, <a href=\"https:\/\/www.cashfree.com\/blog\/how-brands-drive-conversions-with-buy-now-pay-later\/\">improve conversions<\/a><\/mark>, and deliver value where it matters most.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>What is the law of diminishing marginal utility in simple terms?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The law states that the extra satisfaction from each additional unit of a product decreases as more is consumed, even if total satisfaction keeps rising initially.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>What is the law of diminishing marginal utility with example?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Eating pizza is a common example. The first slice gives maximum satisfaction, while each additional slice gives less enjoyment.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>What is the formula of marginal utility?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Marginal Utility = Change in Total Utility \u00f7 Change in Quantity<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>How does diminishing marginal utility affect business pricing strategy?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As perceived value falls across additional units, businesses use volume discounts, tiered pricing, and bundling to align price with declining consumer willingness to pay.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Does the law of diminishing marginal utility apply to all products?<\/strong>\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The law applies less cleanly to collectibles, luxury goods, and network-driven products where owning more can increase rather than decrease perceived value.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>In case you missed it:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-1\"><a href=\"https:\/\/www.cashfree.com\/blog\/what-is-burn-rate\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is Startup Burn Rate?<\/a><\/li>\n\n\n\n<li class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-2\"><a href=\"https:\/\/www.cashfree.com\/blog\/cash-flow-management-explained\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is Cash Flow? Meaning, Types and Management Guide<\/a><\/li>\n\n\n\n<li class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-3\"><a href=\"https:\/\/www.cashfree.com\/blog\/what-is-ebitda\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is EBITDA?<\/a><\/li>\n\n\n\n<li class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-4\"><a href=\"https:\/\/www.cashfree.com\/blog\/private-equity\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is Private Equity?<\/a><\/li>\n\n\n\n<li class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-5\"><a href=\"https:\/\/www.cashfree.com\/blog\/minimum-viable-product-mvp\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is MVP in Business?<\/a><\/li>\n\n\n\n<li class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-6\"><a href=\"https:\/\/www.cashfree.com\/blog\/how-to-start-startup-india\/\" target=\"_blank\" rel=\"noreferrer noopener\">How to Start a Startup in India<\/a><\/li>\n\n\n\n<li class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-7\"><a href=\"https:\/\/www.cashfree.com\/blog\/trademark-registration-india\/\" target=\"_blank\" rel=\"noreferrer noopener\">How to Register Trademark in India<\/a><\/li>\n\n\n\n<li class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-8\"><a href=\"https:\/\/www.cashfree.com\/blog\/payment-aggregators\/\" target=\"_blank\" rel=\"noreferrer noopener\">What are Payment Aggregators?<\/a><\/li>\n\n\n\n<li class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-9\"><a href=\"https:\/\/www.cashfree.com\/blog\/deferred-payment\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is Deferred Payment?<\/a><\/li>\n\n\n\n<li class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-10\"><a href=\"https:\/\/www.cashfree.com\/blog\/lump-sum-payment\/\" target=\"_blank\" rel=\"noreferrer noopener\">What does Lump sum payment mean?<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>There\u2019s something about that first cup of coffee that\u2019s unique compared to your third cup. There\u2019s something different about receiving that first paycheck at a new job when compared to your tenth one. This concept, which states that as the amount of an object received increases, the amount of extra happiness gained from it decreases,<\/p>\n","protected":false},"author":142,"featured_media":35113,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_themeisle_gutenberg_block_has_review":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_wpcom_ai_launchpad_first_post":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[9973],"tags":[],"class_list":["post-35112","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Law of Diminishing Marginal Utility: Meaning, Diagram &amp; Examples<\/title>\n<meta name=\"description\" content=\"Learn the law of diminishing marginal utility with diagram, formula, and real-life examples. 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