Comcast, my cable company, has an annoying habit of unexpectedly raising my bill for cable internet service. When I moved to the Washington, DC, area in 2013, I signed up for Comcast’s Xfinity broadband service at an introductory rate of $41.99 per month. In January, the price went up to $57.99. Then, in May, my bill went up again — to $74.95. That was almost double the rate I had signed up for.
Economists call this strategy price discrimination. Basic economics suggests that companies can increase their profits if they charge different customers different amounts.
Starting out with a low introductory rate and then gradually raising prices helps Comcast get as much money as possible out of each customer. As a long-time Comcast customer, I knew that if I called and threatened to cancel, the cable giant would likely offer me a discount.
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