For a business to successfully practice price discrimination—charging different prices to different customers for the same product—several key conditions must be met:

• Market segmentation: The company must be able to group consumers based on how sensitive they are to price changes (price elasticity).
• No resale possibility: It must be impossible or too expensive for customers who buy at a low price to resell the product to those willing to pay a higher price.
• Monopoly power: The firm must have enough market control to act as a price maker rather than just accepting the market price.
• Separated markets: The firm must be able to keep markets apart, either physically, legally, or digitally, to prevent products from moving from low-priced segments to high-priced ones.
• Information advantage: The firm needs sufficient data to understand consumer preferences and their willingness to pay.

When these conditions are met, a business can increase its total revenue compared to using a single, uniform price for everyone.