What is the flexible-price policy?

The flexible-price policy involves setting different prices for the same product for different customers, based on various factors such as customer segments, purchase volume, or negotiation outcomes. This pricing strategy allows companies to maximize profitability by capturing consumer surplus, which is the difference between what customers are willing to pay and what they actually pay.

In this approach, businesses can tailor their pricing to meet the demands and expectations of diverse customer groups. For instance, bulk buyers may receive lower prices compared to individual consumers, or long-standing customers might be offered discounts that new clients do not receive. This policy provides flexibility in pricing, enabling firms to respond to market dynamics and competitive pressures more effectively.

Additionally, it can foster customer loyalty and retention since individuals may appreciate the personalized nature of pricing. Overall, flexible pricing can be a strategic advantage in attracting a variety of customers while optimizing revenue streams.