4 ms·

I'm curious - is it ok to charge people different amounts for the same product? Is it morally ok? Is it even legal?

btilly 14y ago
Yes, yes, and yes. So long as you do not discriminate on a "protected category" like race, gender or sexual orientation. The classic example that everyone brings up is airlines. If you have 3 random people sitting in the same section of the same airplane, odds are that they paid 2, and maybe 3 different prices for the same exact ride. And if one of them didn't want to stay the weekend before coming back, that one certainly paid more. If this still bothers you, consider someone at a swap meet, bargaining with everyone who walks up. Each person gets a different price for the same product, depending on how well they negotiate, how you're feeling, etc. It is no different. A set price is a convenience, no more, no less. And if you have one, and are successful, you'll eventually run into a large company that hires people whose entire job is to change those prices for themselves. Oh sure, they'll wrap it up in nice phrases like "do you support volume discounts" but at its heart it is the same as the swap meet.
- joefreeman 14y ago
  Thanks, those are great examples for one-off purchases. How about subscriptions to services?
  - btilly 14y ago
    I first encountered this business fact at a small Wall St company that provides access to analytics on a particular type of bond. The price for broker-dealers that issued such bonds was many times higher than for companies that might be trading them. Both types of companies got the exact same access to the exact same data, but the value of that data and the frequency that they were likely to use it was different so they had different prices. If you want other examples, take a look at licensing for access to various services. For instance I would guess that universities pay less for the exact same Microsoft licenses than private businesses. And Microsoft is willing to grant discounts on those licenses to small startups, in the hope that once they are real companies they will pay top dollar. But the master in this arena is Oracle. Monthly license fees are much, much higher for companies that are locked in to Oracle than for companies that aren't. This is why they do not quote a price to anyone - they want complete freedom to negotiate. If you want to learn more about this, including negotiation strategies, I highly recommend Information Rules. It is about 15 years old, but still relevant and worthwhile. The key principle is lock-in. If a company is locked in, you can charge more. If a company is not locked in, you should give a break, and maximize their opportunities to get locked in. (Oracle is the master at this.)

Yes, yes, and yes. So long as you do not discriminate on a "protected category" like race, gender or sexual orientation. The classic example that everyone brings up is airlines. If you have 3 random people sitting in the same section of the same airplane, odds are that they paid 2, and maybe 3 different prices for the same exact ride. And if one of them didn't want to stay the weekend before coming back, that one certainly paid more. If this still bothers you, consider someone at a swap meet, bargaining with everyone who walks up. Each person gets a different price for the same product, depending on how well they negotiate, how you're feeling, etc. It is no different. A set price is a convenience, no more, no less. And if you have one, and are successful, you'll eventually run into a large company that hires people whose entire job is to change those prices for themselves. Oh sure, they'll wrap it up in nice phrases like "do you support volume discounts" but at its heart it is the same as the swap meet.

joefreeman 14y ago
Thanks, those are great examples for one-off purchases. How about subscriptions to services?
- btilly 14y ago
  I first encountered this business fact at a small Wall St company that provides access to analytics on a particular type of bond. The price for broker-dealers that issued such bonds was many times higher than for companies that might be trading them. Both types of companies got the exact same access to the exact same data, but the value of that data and the frequency that they were likely to use it was different so they had different prices. If you want other examples, take a look at licensing for access to various services. For instance I would guess that universities pay less for the exact same Microsoft licenses than private businesses. And Microsoft is willing to grant discounts on those licenses to small startups, in the hope that once they are real companies they will pay top dollar. But the master in this arena is Oracle. Monthly license fees are much, much higher for companies that are locked in to Oracle than for companies that aren't. This is why they do not quote a price to anyone - they want complete freedom to negotiate. If you want to learn more about this, including negotiation strategies, I highly recommend Information Rules. It is about 15 years old, but still relevant and worthwhile. The key principle is lock-in. If a company is locked in, you can charge more. If a company is not locked in, you should give a break, and maximize their opportunities to get locked in. (Oracle is the master at this.)