A more thorough explanation:

Definition: Differential pricing is the practice of setting different prices for the same product or service for different customers. This is also known as price discrimination.

Example: An airline may charge different prices for the same flight ticket depending on when the ticket is purchased, the time of day the flight departs, and the destination. For example, a ticket purchased two months in advance may be cheaper than a ticket purchased a week before the flight. This is an example of differential pricing because the airline is charging different prices for the same service based on different customer characteristics.

Differential pricing can be used by businesses to maximize profits by charging customers who are willing to pay more a higher price, while still attracting customers who are willing to pay less with a lower price. However, it can also be seen as unfair to customers who are charged a higher price for the same product or service as someone else.