Hard Bodies is a new entrant to the local health club scene. The owners of Hard

Question

Hard Bodies is a new entrant to the local health club scene. The owners of Hard Bodies realize that profit can be increased through price discrimination. Accordingly the firm employs several different pricing schemes. For each of the following schemes explain whether it is price discrimination, and if so, what degree of price discrimination it is.

a) An annual membership to the club sells at a 50% discount of the total rate charged customers who choose to pay on a month-by-month basis ( for example, the annual fee is $300 while the regular monthly rate is $50)

b) Obese customers weighting at least 300 lbs get a 20% discount on all regular rates.

c) Spouses of members belonging to the club qualify for a 30% discount on all regular rates.

d) Hard Bodies offers to beat ( through a 20% discount) any rate that a customer is offered by a rival health club.

Explanation / Answer

a.) 2nd degree (volume) b.) 3rd degree (market segmentation) c.) it is not price discrimination d.) it is not price discrimination

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