If You Could Read My Mind: First-Degree Price Discrimination Strategies

Readers are probably a step or two ahead of me. Why, one may ask, does Wendy have to charge all four clients the same price? Can’t she negotiate prices with each client individually? Indeed, she probably can. If she does, Wendy is engaging in price discrimination. Price discrimination is the practice of charging different prices to different customers. Before we elaborate, let’s first identify what would not constitute price discrimination. In our simplified example, we assumed the cost of each job was identical. In the context of interior design, this isn’t a very realistic assumption. Some clients will want more elaborate design jobs than others. Consequently, ...

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