A Segment of One: Fixed vs. Variable Pricing

In this article, the author explores various methods of price segmentation, and the pros and cons of each. As he explains, tailoring price according to willingness to pay is theoretically sound but culturally still questionable. Segmentation according to value and cost-to-serve is more likely to be seen as fair and acceptable, but there is no hard and fast rule. The promise of better earnings and more customers is high, but so is the peril of customer alienation and backlash.