Why do clubs charge a higher entry fee for men than they do for women?

There are certain questions that rattle me sitting at my desk self-isolating, that could perhaps never cross my mind on a normal day. Being more of a house cat type personality, I would probably never bother myself with the notion of cover charges at clubs. A notion similar to this, for my fellow house cats is that of hair stylists charging women more than men for haircuts. These daily occurrences, that we have for the most part normalised fall under the larger picture of what economists’ term ‘Price Discrimination’, more precisely, third degree price discrimination.

Now, the idea of third-degree price discrimination is that the firm is able to separate its customers into two groups, and that the customers cannot resell the product or switch among groups. So, with the goal of profit maximisation, the firm has to decide what price to charge the different groups. What drives you to pay more than the other person? Simply, your willingness to pay. People may differ in the utility that they may gain from a purchase. If you think that you would gain more from a purchase, you would also be willing to spend more for the same.

It is difficult to look past the sexism in thinking that for clubs, women are more valuable customers, and that admitting women with a lower charge guarantees that women will come to the club, and also draw men. Bear with me for a second. The intention behind price discrimination is for the seller to maximise their profits, to scheme a way through which they could generate a higher revenue keeping the production cost the same.

Because women are the ones getting the discount in the first place, they would be more sensitive to fluctuations in the price, making their demand more elastic, meaning that more women would show up to a club if they were offered a discount compared to if they were not. As for men in a club, their willingness to pay is known to increase as the number of women in the club increase. So, as it turns out, price discrimination based on gender, is a way of segmenting buyers based of their differing demands for the product that the club owner is selling in order to increase the clubs profit margin.

Here’s some math—

I was faced with this overwhelming feeling somewhere through the middle of this article, with the assumption that women were being reduced to ‘luring’ men. While the intention behind price discrimination is profit maximisation and of course from a business point of view the discrimination does make sense. But this objectification is only one of the collateral damages that we have come to see. A friend pointed out, while I was expressing the gross-ness I felt about the situation that in-fact this may as well serve as a mirror held up towards the heteronormative and patriarchal society that we are a part of.

For the most part, a lot of us are able to look at the benefits of price discrimination, and how it may make markets more efficient, the reality is that- for the market to reap its benefits, markets must be (adequately) competitive, and buyers should not be at an information disadvantage. But that is hardly ever the case, which is why its benefits for social welfare are not very easy to justify.