Retail discounts for students, etc

In My Humble Opinion
1

Something that occurred to me while unable to sleep - please don’t take it too seriously! :cool:

I live in a university city and virtually every retail business has discounts for students. These range from 10% to 25%. During term-time, half the population of my city is made up of students. There are also a few shops and takeaways that have discounts for military personnel and NHS (medical) workers.

I wonder if these discounts are morally fair, and if they are economically sound policy.

A number of times I have passed by shops because of the large discounts they offer students, thinking, “Well, if they can give a 25% discount and still make a profit, why can’t they offer that to me? Why should I pay 33% more than students, which presumably is all extra profit?”

When I ask if I can get a discount, I’m told that I have to hold a valid student card. This is rather annoying, because I am in fact doing a part-time degree while working full-time, but am not able to get a card. I probably have less disposable income than your average student! There is also the fact that NHS staff are generally well paid.

Would it make better business sense to promote available discounts, but then give them to anyone who requests them? I’m not going to scream discrimination, as retailers have the right to sell the same product or service at different prices to whoever they want. However, is this practice really fair, when retailers have no clue what different people can afford? Indeed, is it fair to charge by what people can afford?

If by discounting prices for a certain segment of society a retailer can increase profits through increased demand, why not offer the same reduced prices to an even larger segment - everyone?

Are students really that much more sensitive to price than others? For a 20% saving, who wouldn’t at least try the cheaper option?

Many people will say that clearly this approach works otherwise retailers would not use it, but I’m not convinced. It just seems to be the done thing and is adopted by convention.

Any opinions on this one?

2

Well, where I’m from, these discounts do indeed only count for college students, not all students.

It makes sense to me that college kids generally have less disposable income than other people to spend on various products. So the 20% discount may make the college kid decide to eat at your restaurant (or whatever) instead of not spending money with you at all.

Whereas presumably other adults have enough money that they will still buy what you are selling even without the discount, and you can increase your profit.

They can’t just give the discount to anyone who asks in that case, because everyone would ask, regardless of whether or not they’d shop there anyway. That would decrease their profits significantly.

As for military discounts, I think that’s just to increase goodwill by seeming patriotic. I’m guessing it’s the same with NHS, although I don’t know.

3

Also, most student are of an age where their “adult” habits, especially with money, are being established. Thus it makes sense for businesses to lure them in now, and presumably keep them as customers forever.

So you don’t have to be altruistic to offer those discounts, as it were. Places like cafes and diners benefit from looking busy, so luring in college age people to “hang out” with their student cards offers a tangible benefit to the business not represented by money.

As for other stuff, all sorts of things play in. If the city is struggling with too much traffic, then offering cheap public transport to a sizable, temporary population saves both traffic jams and wear and tear on the infrastructure, plus it can be sold as “green” to political backers. Win-win (plus you “train” young people to use public transit instead of driving, which may or may not be a goal in itself).

4

A 20% off to everyone isn’t a discount now is it. It’s the regular price for your goods that have an inflated price ticket on them.

5

It’s called price discrimination, and, when done correctly, you make more money doing it. Lowering prices for everyone means that even the “rich” people who can afford more pay less, so you wind up losing money.

On the other hand, you could be proposing the basic concept of coupons, another form of price discrimination. Only poorer people take the time to get the coupons, while richer people don’t think it’s worth it. And, yes, this is a viable method.

The point is just to let as many people as possible buy your products, as long as you are still making at least some profit. Getting less money from poorer people is still better than getting no money from them.

It also works the other direction, but it’s harder to pull off. Software can usually do it well, by offering small features in a “professional” product that are needed by the more serious users–the ones that are most likely to be willing to pay more. But even they usually use sales and coupons to pull it off–only the poorer people will care to wait for those.

A really interesting example of price discrimination are things like the Humble Bundle, where you name your own price. It was discovered that it doesn’t normally work–unless you also throw in giving money to a charity. Without that, the people who pay more feel cheated, even if they think the product was really worth that much money. But with a charity, they feel like they are being altruistic.

The whole thing may seem counterintuitive, but you can’t argue with the results. Companies wouldn’t do it if it didn’t help them out financially.

6

Well, is it better for the shops in Universityville to sell to students at a 10-25% discount, or is it better for them if the students (or the students’ parents) buy the same item on campus, over the Internet, or at a different store in the town where their families live year-round? I work in academia, and it’s my impression that many students basically ignore the shops in town except when it comes to things (e.g. booze) that aren’t easy to get elsewhere. People who actually live here throughout the year don’t have as many easy alternatives and thus don’t have to be lured in with discounts.

This sounds very odd to me. Part-time students at every institution whose policies I’m familiar with have student ID cards. It sounds like you’re not in the US so I don’t know what sort of policies are typical in your country, but I’d suggest checking to make sure you really aren’t entitled to a student ID.

7

Yes, they are. When your spending money is that low, the difference between a six dollar dinner and an eight dollar dinner is tremendous. A dollar off on the onion rings is likely to a student to a bar instead of a different bar, where they’ll probably buy a beer at full price.

8

One aspect of this that interests me is the part about turning off buyers who don’t get the discount. I know I have avoided businesses that offer student discounts because of the OP’s reasoning. I don’t like the idea that I am paying more.

9

Right! And you know the extra you’re paying is pure profit. It does get to me.

10

Man, this is capitalism, not church!

11

I agree - and furthermore:

It really means I’m subsidising the student discount when I pay full price - the store can afford to do it because the profit they make from me offsets the reduced profit for the sale to the student… and this is OK with me, it’s a bit like taxation - not all of that which is extracted from me is necessarily spent on me.
Some of those students will be surgeons when I need a hip replacement or whatever.

From the point of view of the retailer, it can help to promote customer loyalty to the store or brand - get them on board when they’re young and impressionable and maybe you have a full-price customer for life.