Morning Coffee
Price discrimination
Is an important thing to understand
What it means
Is that you can charge people
Different things based on
Their propensity to pay
You're not allowed charge
Different people different things
Just because you don't like 'em
You have to offer them a little something extra
But it has to be something that rich people care about
Business class seats will routinely cost
Five or 10 times what a economy class seat doеs
But it probably costs the airline
Just two, maybe three X - to providе that
It's just the rich person is more willing to pay
So you have to give them
The little things that they need extra
To either signal they're rich
Or that little bit of comfort that they want
[Chorus]
I get a lotta joy outta my morning coffee
If my coffee cost $20
I would pay $20 for my morning coffee
I get a lotta joy outta my morning coffee
If my coffee cost $20
I would pay $20 for my morning coffee
Price discrimination gets used a lot
In enterprise software
Where you have a freemium product
The free version will do almost everything
But then, if you want the version
That's a little extra secure
Or hosted on your site
Or has multi-user administration
So the IT person
Can monitor everything that's going on
You're suddenly find yourself
Paying 10, 100, or infinite times as much
As you go from a free product
To a priced product
Another good concept is
Consumer surplus and producer surplus
Which is the excess value that somebody gets
Even though they were willing to pay more
The product was priced
The same for everybody
[Chorus]
I get a lotta joy outta my morning coffee
If my coffee cost $20
I would pay $20 for my morning coffee
I get a lotta joy outta my morning coffee
If my coffee cost $20
I would pay $20 for my morning coffee
But Starbucks doesn't know that
It can't price the coffee at $20 just for me
'Cause, like, the exact same product
So I'm getting a lot of consumer surplus outta the coffee
And all businesses generate consumer surplus
There are a lotta people who are willing to pay more
Than what Amazon charges them for all their services
[Chorus]
I get a lotta joy outta my morning coffee
If my coffee cost $20
I would pay $20 for my morning coffee
I get a lotta joy outta my morning coffee
If my coffee cost $20
I would pay $20 for my morning coffee
[Man] My morning coffee
[Woman] I would pay anything for it