0:00
Alright, so as marketers, once we've designed the product, we've promoted it, and we've figured out how to make it available to the customer
0:08
we also have to determine what is the right price for that product
0:13
Well, there are a lot of things that we can consider in coming to an answer for that question
0:17
but there are some key things that we really need to avoid in setting our price
0:22
One of those is what's called price discrimination. So what is price discrimination, and why is it harmful
0:30
Well, price discrimination is the practice of selling the exact same product to competing wholesalers or retailers at different prices
0:39
So, why is that a big deal? Well, for one, it creates unfair competition
0:45
Imagine you sell your product to one retailer for $5 apiece, and then you sell the same product that costs the same amount to another retailer for $7 apiece
0:56
Well they either going to have to raise the price in which case more people would probably buy from the other option or they going to have to make less money per unit they sell Neither of those is a very good option for that retailer So that why I say that it creates unfair competition
1:16
Now, price discrimination does not apply if the cost of the product changes
1:22
So if we sell that product for $5 a unit in January
1:26
and by June it costs more to make than it did in January
1:31
we can charge more. and that's not considered price discrimination, and it's not unfair
1:37
The key is the costs have to stay the same, or rather have to change
1:41
for us to change our price to different buyers. This also doesn't apply to transportation fees
1:49
So if someone is buying on the other side of the country or on the other side of the world
1:54
they're probably going to pay a little more in order to get that product to them
1:58
That's completely fine. That's a difference in cost that we have to cover, and therefore we can change the price without engaging in what's called price discrimination
2:09
So hopefully this makes it clear to you what price discrimination is, why it's harmful, and why we should avoid it as marketers
