Q: Can we sell the same product at different prices?
May 26 2010
Answered by: Marc Barber Ask a question
If you have a range of different customers, you may be able to sell your product at a higher price to some of them and a lower price to others (called ‘price discrimination’).
For example, a solicitor or accountant might have one rate for individuals and another for corporate customers; an entertainment provider might have a reduced rate for, say, children, students and elderly people; and a supermarket in a large town where there are many competitors might charge less than one in a rural area with far less competition.
Price discrimination is possible where you can divide your likely customers into distinct groups that are wiling to pay different amounts. Yours must also be the sort of product or service that cannot be readily resold. This is more often the case with services. For example, if you have a landscape gardener, there is no real way for a customer to purchase the work you have done for another. In general, unless you have a monopoly over the supply of your product (which is unusual for a small business), you can discriminate on price only if other suppliers are doing the same – otherwise, by charging a higher price, you will simply lose customers to your competitors.
Successful price discrimination should boost your revenue above the level you would have had by charging a single price to all customers. This is because setting a single price would lose customers unwilling to pay that much and give an unnecessary discount to other who were wiling to pay more.
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