Going "Green" to Increase Profits
One of the hottest topics among business people is how to increase profits by being environmentally friendly. There are many ways to achieve this. At hotels, for instance, by not washing towels during a guest’s stay unless the guest asks, the hotel saves both money and the environment. Green innovations can be featured in advertising campaigns to attract customers. Another potential benefit of “going green” is that it makes environmentally minded employees happy, increasing their loyalty to the firm.
A Berlin brothel has hit on another way to use environmental arguments to its benefit: price discrimination. Mary MacPherson Lane writes in an AP article:
The bordellos in the capital of Germany, where prostitution is legal, have seen business suffer with the global financial crisis. Patrons have become more frugal and there are fewer potential customers coming to the city for business trips and conferences.
But Maison d’Envie has seen its business begin to return since it began offering the euro 5 ($7.50) discount in July, Goetz said.
To qualify, customers must show the receptionist either a bicycle padlock key or proof they used public transit to get to the neighborhood. That knocks the price for 45 minutes in a room, for example, to euro 65 from euro 70.
Although the brothel says the reason for the price discount is that it wants to be environmentally conscious, it sure looks to me like the brothel is dressing up some good old-fashioned price discrimination arguments in a green disguise.
Customers who come by bus or bicycle are likely to have lower incomes and be more price sensitive than those who arrive by car. If that is the case, the brothel would like to charge such customers lower prices than the richer ones. The difficulty is that, without a justifiable rationale, the rich customers would be angry if the brothel tried to charge them more (and indeed, how in general, would the brothel know who is rich?). The environmental argument gives the brothel cover for doing what it always wanted to do anyway.
(Hat tip: Daniel Lippman)