Smarter Pricing: How to capture more value in your market

First-degree discrimination

First-degree price discrimination occurs when there is a unique price for every customer. The auction has been mentioned previously. Haggling in a bazaar is designed to identify the highest price each buyer will bear. Many business-to-business services will be based on bespoke prices per customer, driven by an assessment of economic value and a negotiated agreement.

A form of first-degree discrimination occurs in the market for used cars. As illustrated in Chapter 3, the car salesman conversing informally with a potential car buyer is assessing the customer’s price sensitivity and the likely price that they might be able or willing to pay. Questions about work and their home are trying to establish available income. ...