Some local Gas stations went to a one price for all grades to keep the price under $2.00 a gallon. SO 87 89 and 93 can ALL be $1.99 at the same station. This can kill the illusion that 93 is
"better" than 87, but it makes people buy the right grade of gas for there car. It also keeps people from being scarred away when they see the price sign.
Do any stations do this where you live?
Also what do u think of this idea?
I was just thinking about this today, knowing that the prices of the gas (from the manufacturing plant) are the same for the gas stations. The problem is that the gas station business has so many sellers, that one seller will never influence the market change. There are few scenarios:
1. 1.99 is the same as average price of the regular gas in the area -> The pump will probably get more sales on the premium gas, but since it is charging less, it's profit margin is less as well, and the increased sales might not be equal to previous "discriminatory" pricing.
2. 1.99 is above the average price of the regular gas in the area -> People buying the regular gas (which is most of the revenue, not sure about the profit) will buy it's gas somewhere else, and the premium buyers will buy the same amount as always, since it's price will be similar to the pre-change price. By having less sales overall, the costs per unit will increase (same fixed costs, less units sold) and the gas station will probably loose money.
3. 1.99 is below the average price of the regular gas in the area -> The pump will see modest increase in sales of the regular gas and greatly increased sales in the premium gas. Depending on the price differences, this might create enough profit to justify the change, which I doubt. In that case, everybody else would switch as well.
Overall, I agree that it is a marketing ploy, but don't expect the practice to continue more then a week or so.