How to apply combined price discrimination to particular clients and business

How to apply combined price discrimination to particular clients and business

08/25/2021 - Price optimization

The differentiation by volume and business is one of the most common types of second-degree price discrimination. It is based on the same form as price optimization and promotions on volume purchase, but is introduced in the value equation for the type of client to contextualize the purchase. So, this purchase by volume is moved between the particular client and the buyer that manages his own business. We are going to see some examples of how this is carried out in practice with success in combined price discrimination.

What advantages does combined price discrimination have in your e-commerce?  

Combined prices or bundle pricing,  that is also known as this strategy, is a type of price discrimination based on the volume of units that the buyer acquires. It is one of the easiest as it simply permits the user to benefit itself with a more competent price by purchasing in a pack. 

For your business, the advantage is clear; increase the average ticket of every transaction with a purchase of greater value. This supposes from the liberation of the warehouse thanks to a more continuous sales flow until the savings in logistic costs  for every item, since, for example, you would save the cost of shipment of every unitary purchase.

The price by volume: the price discrimination close to the target

The price by volume: the price discrimination close to the target 

Even being a type of combined price discrimination, this type of strategy marks a difference in function of the type of consumer that acquires the product. Yes indeed, among two variables: particular clients and client businesses. This type of distinction precisely allows for a business type of buyer to benefit from lower prices because it is necessary to buy more units of the product. 

This is the strategy based on using e-commerce’s whose final consumer can be either of  these two types: both particular and business.  An example that you can easily situate is that of messenger service businesses. These have specific tariffs for businesses, but there are also small businesses that it benefits for a concreate period of deliveries at an intermediate price among the particular user and a large business that has negotiated a concrete tariff. 

Also in the case of food a very clear example is found in bulk stores, booming ultimately. In them it is very common to see both particular clients and restaurant businesses. A good landing strategy for them is to include better prices for qualities to become a hole among these buyers.  

As for an e-commerce, the key to applying these combined prices is having a tool that allows you to analyze which is the optimal profit for a volume discount.  A pricing simulation software like Reactev allows you to test to put into practice proposed and analyzed strategy, with scientific data and formulas, whatever its visibility is. This way, you will guarantee 100% your second-degree price discrimination strategy.

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Category: Price optimization

Tags: price bundling, pricing

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Maria Jose Guerrero
Content Manager

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