A differential pricing approach is based on charging diverse prices for several groups of customers. This strategy aims at customizing the price for each buyer depending on their characteristics (purchase profile, connection to brand, or behavior). Also, differential pricing can be based on situational factors, such as timing, demand, and the competition.
The major goal of this strategy is to adapt to consumers’ needs and pricing expectations in order to attract buyers, plus increase sales volume and profit margin. Every customer has particular quality requirements and pricing expectations, and differential pricing allows matching the product value with its cost in consumers’ eyes. Optimal pricing can accelerate the decision-making process and encourage buyers to make a purchase.