Home » Cost and Economics in Pricing Strategy » An artisan sells handcrafted wooden cutting boards and spoons. She has a website where customers can purchase items and she also sets up a booth at regional craft fairs and farmer’s markets. When she sells at fairs and markets, the artisan increases her prices by 5-10%. How is the seller engaging in cost-based price discrimination?

An artisan sells handcrafted wooden cutting boards and spoons. She has a website where customers can purchase items and she also sets up a booth at regional craft fairs and farmer’s markets. When she sells at fairs and markets, the artisan increases her prices by 5-10%. How is the seller engaging in cost-based price discrimination?

The seller isn’t passing her cost advantage on to customers.

The seller is optimizing margins by adding markups to items at markets and fairs.

The seller is able to reach out to new customer segments.

The seller is incentivizing buyers to buy more at markets and fairs.

The seller has higher costs when she sells at markets and fairs, as she must pay to have a booth, transport her wares, and cover other expenses. She has to increase her prices in order to cover those expenses, and she may be including an additional markup in order to optimize her margins.