Price Segmentation: Ice Cream in Venice

August 5, 2015 Mark Stiving

You can learn pricing lessons from many places. A few months ago my wife and I started an Italian trip in Venice. After walking around the fascinating sidewalks and alleys most of the day we decided to stop for some gelato. Most gelato shops are set up only for take away service. However, we found one gelato shop that had tables out front. Our tired feet could use the rest.

Imagine my surprise when I saw the sign “Prices of Ice-Creams at the table are different.” At first I was surprised because I had to pay more to sit at a table. Then I was pleased because I ran into an unexpected pricing strategy. Awesome! Let’s talk about it.

First, this is a great price segmentation technique. Sitting at a table is more valuable to some buyers. Maybe their feet are tired. Maybe they want a relaxing conversation with friends. Regardless, some people are willing to pay more to sit, so the gelato shop charges for it.

Second, notice the sign is in English. We were in Italy. This says to me that Italians didn’t really need the sign. This is accepted practice in Italy. We confirmed this as we ran into similar situations at coffee shops and restaurants throughout Italy (at least the touristy places).

I’m not sure in the US we could get away with this. Mostly because it’s not expected so it would look like we are taking away something (the ability to sit) from customers. However, if many companies started, it would eventually become accepted.

The takeaway for you though is what do your customers value? Are there some things all customers receive but only some really value? Maybe we can charge different prices.

The other lesson, look for pricing lessons everywhere.

Originally posted on Mark’s Pragmatic Pricing Blog.

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