What term is used when businesses charge different prices for similar amounts and types of goods?

The correct term for when businesses charge different prices for similar amounts and types of goods is price discrimination. This practice occurs when a company sells the same product or service to different customers at varying prices, based on factors such as customer characteristics, purchase timing, or quantity bought.

Price discrimination can be legal as long as it does not violate antitrust laws. Businesses often use this strategy to maximize their profits by tailoring pricing based on what consumers are willing to pay or to encourage sales in different market segments. For example, airlines frequently utilize this method by offering different ticket prices based on how far in advance a seat is purchased or the customer segment, such as students or seniors.

Understanding the nuances of price discrimination is vital in retail and service industries, as this strategy is fundamental to pricing philosophies that seek to optimize revenue.