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A comment on If people tried to pay for other services like they try to pay for programming. Parent comment

Re:If people tried to pay for other services like they try t... by yayadarsh on Wednesday December 15, 2010 @05:16PM (#2010049)
When firms offer price discrimination (that's what this is called formally, offering different prices to various classes of consumer) they are making more money by taking the consumer surplus that would have been made (the extra money a consumer would have paid for the good).

Think of it this way: a rich man is willing to pay up to $10.00 for the chicken breast that his family needs for dinner, but his blue-collar cousin can only afford $6.00 at the most. Had the grocery store only created one line with the price of $8.00, their revenue from these two consumers would be only the rich man's sale, 8 dollars. If, on the other hand, the store had two lines, one for $5 and one for $10, they can make 15 dollars from these two shoppers!

Hope that clears it up.

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Re:If people tried to pay for other services like they try t... by eftpotrm on Wednesday December 15, 2010 @07:52PM (#2010640)
No, I'm aware of the theory, I'm just not at all convinced it actually works out anything like this in practice - particularly once the extra costs of carrying the same line artificially twice are factored in. Oh well - they know their business but it still sounds fishy to me!
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