Response to Peer Discussion

Joshua•
Describe at least one (1) new 2nd Degree Price Discrimination tactic that is not currently in use
by the company. Describe at least one (1) new 3rd Degree Price Discrimination tactic that is not
currently in use by the company.
o
What is the current price and what is your proposed new price?
o
Why do you believe this approach is better than other 2nd Degree options?
•
My company is TruGreen we are the largest lawncare provider in the US and Canada. Our current pricing
discrimination is Perfect Price. We are the largest and most EPA friendly company in our Markets. This
enables us the need and the ability to charge more. Commercially we have more ability to adjust pricing
due to the fact we price by round and by-products applied, and this all depends on the scope of work.
Residentially prices or set and they do not move a whole lot. I would utilize the secondary method by
giving a substantial discount for bundled work.
An example of this would be a homeowner that we used our service for lawn, tree and shrub, and
mosquito. Give that client a lower price offering due to the fact he is spending more money. As it
pertains to pricing the starting price residentially is 58.00, and I would start at 48-50 based upon the
bundled services. I would also create an agreement where the customer would pay monthly versus, by
an invoice for each application, this makes it more affordable and enables the customer to not focus on
how many treatments are completed at any given moment. It would be difficult for us to use the 3rddegree pricing strategy due to our rules about diversity and fair play. The two-part pricing structure
works the best for our model with the bundle.
•
Is your company or its products/services impacted by governmental influences—such as price
ceilings, price floors, grants, tax credits, taxes, or subsidies? If so, how do they influence your
pricing? If not right now, share how one or more might become a part of your reality.
My company is impacted by Govt. regulation, for instance, we may use a product, but if the EPA puts it
on their hot list, we immediately stop using it until we receive the all clear. We had a product called
MSMA, and it was placed on the hot list and then brought back for Commercial use only. We decided to
remove it and changed to a more expensive product, and thus regulatory issues affect our price. We
have none of the other govt influences listed.
Sources:
1. , JWI 515 Week 7 Lecture Price Discrimination
2. https://www.epa.gov/assessing-and-managing-chemicals-under-tsca/regulation-chemicalsunder-section-6a-toxic-substances
Vivek Post
Professor Pellitteri and fellow students,
I have selected the Microsoft Azure cloud service for this post.
Second-degree and third-degree price discrimination
In an attempt to capture the consumer surplus, second-degree price discrimination, or nonlinear pricing,
involves pricing based on the quantities bought(Polyconomics,1). Microsoft Azure offers great seconddegree price discrimination tactics. Based on the number of licenses with multi-year contracts, Microsoft
allows enterprises to buy Microsoft services at a considerably lower price, i.e., 15% to 45%
cheaper(Harvey,2). It is, however, complex to mix and match on-premise services and cloud services
together based on quantities(2). To make its second-degree pricing policies more attractive and increase
the utility for customers, Microsoft should combine and simplify legacy product licensing and new cloud
service licensing offers.
Today, enterprise customers use on-premise products and services along with Azure services. A new
second-degree pricing tactic can be to create bundles of on-premise licensing and Azure services based
on the number of user licenses. As the cloud prices keep frequently dropping due to price wars,
Microsoft must keep adjusting its costs as it improves efficiencies in Azure services. I believe that the
bundling pricing tactic will allow more straightforward conversion of Enterprise customers to
subscription-based Azure services and fuel long-term Azure growth.
Microsoft employs third-degree price discrimination in the form of student discounts and discounts for
educators(Microsoft,3). The students discount, however, is for people who are eighteen or older. I
would suggest creating a third-degree price discrimination category for parents of young students, e.g.,
for kids in elementary and middle schools. The Azure should be free for essential services and pay per
use for specialized Azure services. Microsoft can complement the category by providing coding classes
for young kids on the Azure platform by partnering with organizations like Khan Academy. As kids grow
with Azure services, it will give massive advantage for Microsoft to capture mind-share as these students
get into college and workforce.
Is your company or its products/services impacted by government influences?
Microsoft Azure provides cloud services globally but is heavily dependent on the data centers’
infrastructure in multiple countries. As a result, Microsoft will get impacted by any changes in tax
policies or other government policies. For example, the Chinese government likes to keep the data
generated inside China under its control (Darrow,3). As a result, Microsoft needs to build additional
infrastructure inside China that increases its costs. In the absence of Government subsidies and tax
breaks, Microsoft will have to increase its product prices inside China.
Thanks
Vivek
References
1. Policonomics,n.d., https://policonomics.com/lp-monopoly2-second-degree-pricediscrimination/
2. Cynthia Harvey,2016, Azure Pricing: How to Get the Best Deal,
https://www.datamation.com/cloud-computing/azure-pricing-how-to-get-the-best-deal.html
3. Microsoft, https://azure.microsoft.com/en-us/education/
4. Barb Darrow,2017, Microsoft Again Claims Most-Favored Cloud Status in
China,http://fortune.com/2017/05/23/microsoft-claims-unique-cloud-status-in-china/
5. Paul Mozur and Nick Wingfield, 2016, Microsoft Faces New Scrutiny in China,
https://www.nytimes.com/2016/01/06/business/international/microsoft-china-antitrustinquiry.html
6. emerset.com, 2016,https://emerset.com/insights-and-resources/product-licensingagreements/complexity-microsofts-volume-licensing/
7. Price Discrimination, JWI 515 Week 7 Lecture material