In Topics

“The worst form of inequality is to try to make unequal things equal.” (Aristotle)

Not all customers are created equal. Certain groups find more satisfaction in a given product than others do. A smart professional spots this and realizes that pushing the same price across the market is inefficient: in some cases it leaves a good chunk of money in the pockets of customers, in other cases it prevents sales that would still be profitable at some lower price. This session explores the fascinating challenge of tailoring prices to individual valuations. One lesson is that proper price discrimination requires some input from customers– the traditional “take-it-or-leave-it” approach is not sufficient because it is the customer who ultimately decides whether something is cheap or otherwise. Second, while there are many forms of discrimination, they fall into one of three buckets: observation, choice, or mechanism. The session presents several examples to explain these labels and suggests an action plan.