Monday, December 14, 2009

Price Discrimination is "Unethical?"

MR has a link to a pricing scheme relevant here. A shop owner searches her soul but maximizes profits anyway.
Mata says she knows it's "unethical," but she sizes people up and names a price that she thinks fits the client.
My students like to argue with me about the "fairness" of price discrimination but I try not to take the bait. I would love to debate philosophy with them but have to point out that this is irrelevant. Fair, ethical or otherwise, it is often profitable. Those who eschew the practice will be replaced by those who do not.

1 comment:

  1. I own a business selling custom suits to business students and have been asked many times how I set my prices. I tried an EDLP model, special discounts to certain clubs, and discounts for people that signed up on our website. I've given up thinking about it too much as it seems people just want feel special. Whether that meant free shipping, a small coupon, or a free tie. Sizing a customer would be very hard in a school setting anyway. Some of my best customers come to class every day hungover and wear sweatpants.