Price Discrimination Framework

Charge based on willingness to pay

Pricing Marketing Strategy

Problem it solves

poor financial decisions

Best for

Businesses with variable pricing

Not ideal for

Those with fixed pricing or limited customer segmentation

Overview

Why this framework exists

This framework involves charging customers based on their willingness to pay, rather than a fixed price. By offering different pricing tiers or bundles, businesses can capture more revenue from customers who are willing to pay more.

Core principles

3 total

Customers have different willingness to pay
Pricing should be based on customer segments
Value-based pricing can lead to higher revenue

Steps

2 steps

Identify customer segments
Determine which customer groups are willing to pay more for your product or service.
Pro tipUse data and market research to inform your segmentation.
WarningAvoid stereotyping or making assumptions about customer willingness to pay.
Offer tiered pricing
Create different pricing tiers or bundles to capture more revenue from customers who are willing to pay more.
Pro tipEnsure that each tier offers unique value or benefits.
WarningBe cautious of cannibalizing sales from higher-tier customers.