Legal Definitions - differential pricing

Differential pricing refers to the practice where a seller charges different prices for the same product or service to different customers or customer groups.

• Example 1: Movie Theater Tickets

  A local cinema offers tickets for the same movie showing at different prices: $18 for adults, $12 for children, and $15 for seniors. All customers watch the identical film in the same theater at the same time.

  This illustrates differential pricing because the cinema is selling access to the exact same product (a movie screening) at varying prices based on the customer's age group.

• Example 2: Software Subscription Tiers

  A project management software company offers a "Basic" plan for individual users at $10/month, a "Team" plan for up to 10 users at $75/month, and an "Enterprise" plan for larger organizations with custom pricing. While the Enterprise plan might include additional features, the core service of project management functionality is available at different price points depending on the customer's size and needs.

  This demonstrates differential pricing as the company is setting different prices for its software service based on the customer segment (individual, small team, large organization) and the scale of their usage.

• Example 3: Airline Fares

  Two passengers are on the same flight, sitting in economy class, traveling from New York to Los Angeles. One passenger booked their ticket three months in advance and paid $250, while the other booked a week before departure and paid $500 for an identical seat and service.

  This is an example of differential pricing because the airline is selling the same product (a seat on a specific flight) at significantly different prices to customers, often based on factors like booking time, demand, and ticket flexibility.