Or you could call it "price segmentation" like Joel does:
"All from the power of segmentation: separating your customers into different groups according to how much they are willing to pay, and extracting the maximal consumer surplus from each customer."
No, they're separate things. Price segmentation is selling marginally different products, but making each product available to everyone. So you have Windows 7 Ultimate and Windows 7 Professional and Windows 7 Home and Windows 7 Home Professional and Windows 7 Ultimate Home Datacenter Server at separate prices, and even though the only difference is that you run a different build script, it's not the same as price discrimination because you let the consumer choose. I interviewed at a company once that made a home-architecture CAD tool. They sell about 20 different versions of the same software, all at different price points, each generated by different build settings from the same codebase.
Price discrimination is when you sell the same thing to different people for different prices. It's technically illegal, so universities get around it by sending you a $50,000 tuition bill and a $40,000 need-based scholarship instead of just sending you a $10,000 bill. Other forms of price discrimination include student discounts and senior discounts. Health care in the US thrives on price discrimination--the simple words "I don't have insurance, can we talk about arranging payment" can knock off 50% or better of your bills with some doctors.
Price discrimination at elite colleges means "rising tuition costs" are really much ado about nothing. The nominal tuition only represents what they charge rich people, which is often independent of what they charge not-rich people.
if you regard effort on the part of the student as part of the pay, then colleges are segmented. hard sciences and humanities educations don't really resemble each other much.
"All from the power of segmentation: separating your customers into different groups according to how much they are willing to pay, and extracting the maximal consumer surplus from each customer."
http://www.joelonsoftware.com/articles/CamelsandRubberDuckie...