Ramsey Pricing

Ramsey Pricing is a pricing strategy used to determine how much to charge for services, particularly in industries like utilities or transportation. It aims to set prices that cover costs while minimizing the impact on demand. The idea is to charge higher rates to those who are less sensitive to price changes (often higher-income users) and lower rates to those who are more sensitive (often lower-income users). This approach ensures that essential services remain accessible while still generating enough revenue for providers to cover their costs.