Each customer is different in terms of their needs and ability to pay. There is no rule that says that every customer needs to pay the same price for the same product or service. Working on a government contract has more overhead than working on a commercial account. As such, the billing rate we used on government contracts was often higher to capture our additional efforts.
Restaurants, particularly buffets, often offer a senior rate because seniors generally eat less and eat earlier then non-seniors. McDonald’s offers similar burgers on the “Buy by the Number” board to burgers on the value menu. Customers can order a la carte for less money. This pricing strategy weeds out the cost-sensitive from the less cost-sensitive shopper.
Car dealers are the masters of customer-based pricing. They display a high sticker price on the car window. During the test drive, the salesman assesses the customer’s price sensitivity and haggling ability to determine the final price they are willing to offer the prospective car buyer.
How can you price your product or service differently to extract maximum revenue based on the customer’s need and their ability to pay?
