Dual Pricing

Dual pricing is the practice of setting prices at different levels for the same product or service. It can vary, according to the currency used to make the purchase. Dual pricing may be used to accomplish a variety of goals, such as to gain entry into a foreign market by offering unusually low prices to buyers using the foreign currency, or as a method of price discrimination.

Dual pricing can also take place in different markets that use the same currency. This is closer to price discrimination than when dual pricing is implemented in foreign markets and different currencies. Dual pricing is not necessarily an illegal pricing tactic; in fact, it is a legitimate pricing option in some industries. However, dual pricing, if done with the intent of dumping in a foreign market, can be considered illegal.

• An aggressive competitor may use dual pricing to make a splash when they enter a new market. The long-term intent of such a strategy is to drive out other competitors and then raise prices once those competitors have been priced out of the market. This practice can be illegal under certain circumstances.
  
• There may be internal financial and tax reasons behind a dual pricing strategy. For example, adverse currency exchange rates or currency retention requirements may make it more difficult for a company to sell into a certain market. In such a case, a seller must raise prices to offset these costs of doing business.
  
• Dual pricing may come as a result of varying distribution costs in market. For example, a distributor might be used in one market, while sales can be direct to consumers in other markets. Each distribution variation results in different margins, unless prices are altered to generate a uniform margin in all markets.
  
• Dual pricing may occur when pricing is demand-based. For example, an airline can offer one price to an early-booking customer and a higher price to someone attempting to buy a seat at the last minute.