Question

Here are some examples of a pricing strategy:

- A cold medication sells a regular strength box with 18 pills, each 200 mg to be taken three times a day, for $9.99. It sells an extra-strength box with 12 pills, each 300 mg to be taken twice a day, for $15.99.

- Many bars and nightclubs feature a "lady’s' night" in which women are offered discounts or free drinks, or are absolved from payment of cover charges.

- Universities charge more for out-of-state residents.

For each example, what drives the pricing strategy? What are the costs and benefits to the consumer? What are the costs and benefits of the firm?

Answer 1

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