Originally Posted by
ppp909
It would make little sense for them to charge less in total than paying for the higher class upfront because then everyone would do it.
Conversely, you could say that it would make little sense for them to charge more in total than paying for the higher class upfront because then no one would do it.
Instead, the aim is to charge as much as possible for certainty. Sell all the flights at a high price? Great, no need to offer any cheap upgrades. Fail to do this - try to claw back some of the revenue that you left on the table by charging too much earlier on. Just don't create an incentive for those who can afford to pay the revenue maximising price (whatever it is) to defer the purchase of their upgrade. To me, by the way, $1,100 from WTP-CW sounds about right.
It's expensive in absolute terms but at or slightly more than the difference between a cheap(er) one-way T and a one-way I fare, meaning that bargain hunters will still get in early, while the airline knows/hopes that some people who could have afforded an I/R or D fare but had to get W or E due to timing will be able to upgrade. Meanwhile those who could afford a D/C/J fare are already committed.