In pricing strategy, what is the term for charging different customers different prices for the same product?

In pricing strategy, price discrimination is charging different customers different prices for the same product or service.

The economic concept concerns prices that differ for reasons other than differences in supply cost. A classic example is a cinema charging different admission prices to adults, children, and students when the viewing experience is largely the same. Businesses use such pricing to reflect differences in willingness to pay or demand conditions.

Economists commonly describe first-degree, second-degree, and third-degree price discrimination. First-degree pricing attempts to charge each buyer their maximum willingness to pay. Second-degree pricing varies with quantity or product version. Third-degree pricing separates identifiable customer groups.

Price discrimination is not automatically illegal. Its legality depends on jurisdiction, market power, the reason for the difference, and applicable consumer-protection or competition rules. Price skimming is different: it launches at a high price and later lowers it over time.