The New York City Department of Consumer Affairs (NYDCA) recently released a well-researched report documenting similar products having different prices based on the target customer’s gender. Target, for instance, charged $24.99 for a red scooter and $49.99 for a scooter that appeared to be identical — except for its pink color. (Note: that’s a 100% difference!) Target equalized the prices after the report was released, labeling the differential a “system error.”
The NYDCA report also provides examples such as women’s hair care products selling at an average 48% premium compared to similar men’s products, and Levi charging 29% more for the female version of its 501 CT jeans. The study, which has garnered a good bit of media coverage, focuses on 794 products in 35 categories, and it concludes that in 30 of these categories, women pay more than men.
These findings spotlight a dicey pricing quandary faced by most companies: should you charge certain demographic groups more simply because you have the ability to profit by doing so?
The bottom line: the free market may be the backbone of a thriving economy…but it isn’t necessarily fair to all consumers.
While I’ve long trumpeted pricing as an underutilized profit lever at companies, being aware of the implications of offering different prices to different market segments is important. Beyond the public relations concern of avoiding customer backlash if unseemly pricing practices are exposed, pricing reflects the moral fabric of a company. In this sense, pricing is more than profit. Executives — who often are not well-versed in how their products are priced — need to reflect on whether current strategies result in prices that represent their company’s intended values.
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