The Customer Service Survey
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Price Discrimination and Politics
Wednesday - November 12, 2008 02:04 PM in
by Peter Leppik
"Price Discrimination" refers to the common practice of offering wildly different prices for very similar products, in an effort to extract more revenue from those customers willing to pay more.
Perhaps the most familiar example is the byzantine system of airfares, where the price of any given seat on an airplane might vary by a factor of five or more, depending on when the ticket was purchased, what restrictions apply, and where else the traveler is going. The price of any given plane ticket is almost completely divorced from the cost of carrying a passenger from Point A to Point B, as evidenced by the fact that tickets on nonstop flights are usually more expensive than flights with one or more stops, even though the costs incurred on the nonstop flight are lower.
Most customers hate price discrimination (it's perceived as unfair, and often results in bizarre pricing rules), so companies which practice it often hide it. Amazon.com, for example, caught some heat a few years ago when some bloggers discovered that they offered the same book for different prices to different customers.
I thought it was amusing, however, to see price discrimination appear in political fundraising of all places. This week, the Obama campaign started raising post-election money to pay for things like campaign debts, inaugural parties, and so forth. They sent e-mails to campaign donors and volunteers offering a "victory" T-shirt in exchange for a donation.
As some people quickly discovered, though, at least two versions of the e-mails went out. People who hadn't given much money got an offer to "anyone who gives $30 or more gets a free T-shirt." Those who had given at least a couple hundred bucks got the message "give $100 or more and get a free T-shirt."
Amusingly, however, after some blogs started to write about this clumsy effort at price discrimination, the larger donors got a second e-mail with the more carefully-phrased solicitation, "If you give $30 or more you'll get a T-shirt. Won't you make a donation of $100 or more?"