This transcript was generated from the episode audio and may contain minor errors.
[Music]
Is there anything wrong with selling to a range of customers at different prices? What if you've got a product or a service and you wanna sell it at different prices to different people? Is there anything wrong with that? Anything unethical or immoral or illegal? And if not, how can you do it without somebody finding out and getting mad?
Now, sometimes people are surprised to hear that it is possible to sell the same thing to different customers at different prices. Our initial reaction might be to think that this is unfair, like this is just unfair, it shouldn't be the same price for everyone, but is it really? Okay, that's what this caller is wondering about today. I'm gonna give you a few different examples of how this happens all the time and what the implications are when you're learning to set a price for what you're selling. So first of all, why is it possible to do this?
Why is it not generally speaking unethical? And what do you need to know as you make decisions about your pricing, your product and service, as you think about what am I gonna sell it for and how do I make that decision? Well, let's talk about all of that. In this episode, gotta shout out to our sponsor and then we're gonna dive right in with Becky's question. [Music]
Hi, this is Becky from Manchester over in the UK.
I've been listening to the show for the past couple of years and the puns still get me. I'd like to know if it's ethical to sell the same thing to different people at different prices. I heard you say something about this in an interview the other day and I was wondering if you could say more. First, is it ethical to sell the same thing at different prices? And second, how do you do it?
Wouldn't people see what other people get paid and then get upset? Thanks, Chris. - Becky in Manchester. Hey, what's up? Thank you so much for listening over there.
And this is a great question. I'm glad we have a chance to kind of dive into it here because I guess my question to you in return or to anybody out there is when was the last time you bought a plane ticket? Now, I know that at the time I'm recording this, people are not traveling as much as perhaps they were a few months back or hopefully a few months from now but just think about the last time you were on an airplane. If there were 150 people on that flight, those people paid one of at least 15 to 20 different prices for their seat. Like what you paid is probably different from the person next to you or behind you or in front of you.
And I'm not even talking about first class or just talking about everybody in the same cabin. Like they're all paying different prices for their seats and it could be even more than 15 to 20 different prices. And most people know that. Like most people know that, oh, there's an airfare sale. I should buy it a day because the price is going to be higher for the same flight tomorrow.
And it's not just based on when you bought the ticket. It's also based on how you were traveling if you are connecting passenger, for example. Often it's cheaper to fly farther. There's this whole practice of hidden city ticketing where you can actually save money by not taking flights, by booking a connection that's onward from your actual destination. So I won't get too sidetracked into the technical points there.
The bigger point is that everyone pays different prices for the same thing. And for the most part, we understand that and accept it. Another real world example relates to scarcity. So like Kickstarter campaigns. They do this all the time.
If you've ever supported a Kickstarter campaign, the early backers get to purchase the product for a lower price, typically. Or the rewards are more lucrative, more valuable when the campaign first starts. And so they have these tiered rewards. And once the items in the lower tiers are gone and everyone else pays more. A lot of events increase tickets as they sell out.
Like if it's coming up to the day of the event, they've already sold 95% of the tickets, that small percentage that remains are gonna cost more than when there were early bird tickets. You had early bird tickets, you had regular price, you had last minute. So all kinds of examples there. It could be even like a student discount or other need-based discount. And so we're used to this.
The thing that would not be okay would be anything that is discriminatory. Discriminatory based on a certain class or a certain group. Discrimination is unethical and often illegal. You can say, well, you can't charge more for people based on their race, based on their sexual orientation, their gender. Often elderly people are protected.
Lots of things like that. But that's not what we're talking about here. We're just talking about a business that wants to maximize revenue, whether it is that event or that airline or whatever it is. So as a side hustler, if you're thinking about this for your small business, the main thing you want to avoid, aside from discrimination, of course, don't do that. But aside from that, you just want to avoid the perception of unfairness.
You don't want people to say, oh, this is fundamentally wrong, that so-and-so was able to purchase it for this price and now it's higher for me. If you think about that Kickstarter campaign, if you happen to stumble upon it after the campaign's been going for a while and those lower tiers are already effectively sold out, you might say, oh, I wish I had found this earlier. But you're not necessarily thinking that it's unfair, right? You're just like, oh, I should have gotten earlier, but I didn't, so this is what's available to me now. I think there you're able to see, oh, it's not arbitrary.
If I had purchased earlier, I would have been able to get this price. If I had signed up for the event when it was first on sale, then I could have saved money, but I didn't. So here I am. And now my choice is to register for the event at a higher price or to not register at all. So if, for example, you told people or you promised people that everybody's paying the same price and then you didn't, then that would be unfair and unethical and you would run the risk of losing trust if anyone discovered that.
But aside from extreme scenarios like that, I think it's good to experiment with pricing. It's good to try some of this stuff out and see, okay, what could I do to put my product or service on sale, maybe in this one particular forum without necessarily announcing it to everybody. I mean, that's what Groupon and sites like that do all the time. So lots of examples and information there, but in short, there's nothing unethical about it. It's just a matter of avoiding that perception of unfairness.
Thank you again, Becky. And thank you listeners. If you've got a question, come to sidehustleschool.com/questions. We'll be featuring them throughout the year, along with updates from other listeners as they launch their projects. Be sure to subscribe.
You can listen wherever you get your podcasts. My name is Chris Guillebeau. This is "Side Hustle School." [Music]
From the Onward Project.
