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Price Discrimination in SaaS

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Based on feedback from my last post about
free software
⁠
, I'll keep writing about core microeconomic concepts and their applications to modern software. That's the good news!
Bad news is that some people felt that the previous post was too long. So, this one is short.
Today's topic: what price discrimination is, how many software-as-a-service companies
avoid it
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, and one anecdote to explain it.
info

Price discrimination is a selling strategy that charges customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to. In pure price discrimination, the seller charges each customer the maximum price he or she will pay.
Source
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In our ever-growing subscription economy, where you can get
unlimited coffee for $9/month
⁠
, transparent, tiered pricing is the norm.
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transparent-pricing.2d6895cb7189423aa71be79eb216df4f.png
Transparent pricing.
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However, I still don't see this practiced universally.
I don't consider myself a very good negotiator. My most successful tactic to date was getting the purchase price down on my car by forwarding offer emails from one dealership and back to another, because I didn't have the confidence to negotiate in person.
However, more recently, I was dealing with a software company and I needed to upgrade my account. The software as a service that they provide is such that, at least in my mind, their pricing should be modeled openly and transparently. It's not.
The pricing on their website actually looked something like this:
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price-discrimination.png
Price discrimination: charge each customer as much as you possibly can.
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Fortunately, in this case, it was incredibly easy to significantly drop their quoted price with no back-and-forth. They simply charged what I was willing to pay.
The negotiation went something like this (fictionalized for dramatic purposes):
Him: It's an additional $6,000/year for the upgrade, plus a $2,000 mandatory setup fee to upgrade the integration.
Me: But we only pay $4,000/year now. And we've already integrated, so why is there a setup fee?
Him: Well, you are grandfathered into previous pricing and this is the cost for new customers and upgrades.
Me: But I have no idea what you're charging other customers. It's clear from your website you could be charging them anything.
Him: ¯\_(ツ)_/
Me: Can we do $6,000/year total and waive the setup fee?
Him: Yes, we can do that.
This thing would have been a whole lot easier if they just had clear-cut pricing.
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