Premium prices and data

Putting a premium price on certain products which cost almost the same to produce is a common marketing trick which can be brought back to the price sensibility of the different consumer and is having now a boom thanks to the extremely exact consumer profiling.
Think about the cappuccino made with fair trade coffee or with vanilla flavour. By buying one of them you send the message that you don’t mind paying a bit extra.
The strategy is to charge the highest price that the consumer will pay for that product.
A pricing strategy called First Price discrimination:

Exercising First degree (or Perfect/Primary) price discrimination requires the seller of a good or service to know the absolute maximum price (or reservation price) that every consumer is willing to pay.

More generally there are 3 common techniques for finding customers who are the first degree price discrimination: Continue reading “Premium prices and data”