Legal Definitions - persistent price discrimination

Persistent price discrimination refers to a business practice where a seller consistently charges different prices to different groups of customers for the same product or service, even when the cost of providing that product or service is the same for all groups. This is a long-term, ongoing strategy, rather than a temporary or one-time pricing adjustment. The goal is often to maximize revenue by charging each customer segment what they are willing to pay.

Here are some examples illustrating persistent price discrimination:

• Subscription Service Tiers: A popular online streaming platform offers various subscription plans: a "Basic" plan with advertisements at a lower monthly fee, a "Standard" plan without ads, and a "Premium" plan that includes 4K resolution and more simultaneous streams at the highest price. All plans provide access to the same core library of movies and TV shows.

  Explanation: The streaming platform consistently segments its customers based on their willingness to tolerate ads, desire for higher resolution, or need for multiple simultaneous users. While there are some feature differences, the core product (access to content) is largely the same, but different customer groups persistently pay different prices for it, reflecting their varying willingness to pay.

• Geographic Software Pricing: A multinational software company sells its identical productivity software suite at different prices in various countries. For instance, the software might be priced significantly lower in developing economies compared to highly industrialized nations, even after accounting for currency exchange rates and local taxes.

  Explanation: The software itself is the same product globally. However, the company persistently charges different prices in different geographic markets, recognizing that customers in certain regions have lower purchasing power or different competitive landscapes. This allows them to capture more sales in diverse markets by adjusting prices to what local customers are consistently willing and able to pay.

• Professional Services for Client Segments: A law firm consistently offers different hourly rates for its legal services based on the type of client. They might have a reduced rate for non-profit organizations, a standard rate for small businesses, and a premium rate for large corporate clients, even when the specific legal tasks performed (e.g., contract review, basic litigation) are similar across these client types.

  Explanation: The core legal service provided by the firm's attorneys is comparable, but the firm persistently charges different rates to different client segments. This strategy acknowledges that non-profits have budget constraints, while large corporations may have a higher perceived value for legal services and a greater ability to pay, allowing the firm to maximize its overall revenue across a diverse client base.