Discrimination Pricing

Discrimination Pricing: is a pricing strategy that charges customers different prices for the same product or service.

Advantages of Discrimination Pricing

• Avoiding congestion. One way of managing demand.
• The use of Peak and Off-Peak Pricing helps manage demand.
• You are able to make as much money from people that are willing to pay
• You are also able to make money from people that can't pay quite as much

Disadvantages of Descrimination Pricing

• Business may lose custom if they are charging significantly higher prices
• Customers may go to a different business if they know they can get a cheap

First Degree Price Discrimination: Involves charging customers the maximum price they are willing to pay.

Second Degree Price Discrimination: Involves charging different prices depending on the quantity used.

Third Degree Price Discrimination: This involves charging different groups of people.

Examples of Price Discrimination:

Dry Cleaning: Dry cleaners typically charge more money to have women's clothing dry cleaned than men's clothing dry cleaned.
Car insurance: Men typically pay more in car insurance than women. Under 30's typically pay more than over 30's, and under 25 males typically pay more than any other group.
Hair Cutting. Men will typically pay less in Hair Cuts than women do.

Hair Cutting: Men typically pay less in hair cuts than women do.