Part of a larger price discrimination strategy hurdles are used to separate those customers that place a lower value on a product and offer them prices tailored to that valuation.

A hurdle is a kind of price discrimination (or differential pricing) in which a customer is rewarded with a lower price in exchange for jumping over a figurative hurdle. The goal of the hurdle is to make sure that only those who truly focussed on price above all else get the discount.

This is different than across-the-board discounting, in which all customers would receive the same discount, even if they were prepared to pay more. The problem with this kind of broad discounting is that the seller discounts even when they don't have to, to customers that would have happily paid full price. This is often referred to as leaving money on the table.

There are many different kinds of hurdles. One common example is a mail-in rebate. Typically the seller will promote the lower after-rebate price knowing it will activate buyers, of whom only a few will actually get around to completing the form and mailing in the proof of purchase required to get the rebate. Only those that really cared about the discount actually get it while the rest pay full price.

Another example is the Midnight Madness, Black Friday or Boxing Day sale, in which discounts are offered to buyers prepared to jump one or more hurdles including long lineups & and unpleasant shopping experience, odd hours, etc.

Discounted nights at the movies are another rood example. In many communities movie tickets (and sometimes even concessions) are deeply discounted on Tuesday nights. Most people would rather go to the movies on the weekend, and getting out on a Tuesday is the first hurdle.

The discount made Tuesday nights became popular with teenagers, who generally had less disposable income than adults. That created an additional hurdle for adults... if you wanted to take advantage of the lower priced tickets on Tuesday you would have to deal with a theater full of kids talking and texting. That meant that adults, who are more likely to be able to pay full price, were even less likely to take advantage of the discount, and more likely to pay full price on any other night.

Product attributes, like color, can also be used as a hurdle. For example most people are looking to buy red roses at Valentines, so a different color may be offered at a lower price, the fact that they are not red being the hurdle.

Early-bird specials are another kind of hurdle. Most people don't want to have dinner at 4 PM, but if you are prepared to jump that hurdle you have proven that price is your priority and are rewarded with a discount.

That is the great thing about hurdles – used properly they are very efficient at determining what people really care about. The seller can't just ask them – if they were to simply ask "are you interested in a discount?" almost everyone would say yes.

But a good hurdle makes them prove it. The seller is almost challenging the buyer... "I'll give you this discount, but only after you prove that you really care about it by jumping this hurdle".

Hurdles are a very powerful technique for increasing sales and profits by selectively targeting the customers most focussed on price.