Dual pricing

In the context of investment and foreign exchange, dual pricing is the existence of two different price quotations. These are offered by a unit trust manager who quotes a lower price as the selling price and a higher price as as buying price.

Transacting with bonds may involve dual pricing schemes. Setting two different price quotations is also particularly common in foreign exchange, where both buying and selling of currency occur. These may also be applied when, for example, a person wants to send money to another person in a different country via wire transfer. In such a situation, the bank uses the differences in price to compute the amount of money that the recipient should get, depending on the currency in that country. Of course, this also means that the amount that was originally sent is not necessarily the exact amount that will be received, because of the differences brought about by the pricing.

Investors who wish to buy and sell currency have to pay close attention to the differences in price. By doing so, an investor will be able to ascertain whether it is time to purchase a particular currency or not. In many cases, the exchange may come out to be very disadvantageous, so it might be wiser to choose an alternative investment or to wait for further pricing adjustments.

In the context of commerce, however, dual pricing refers to the sale of the same product at different prices, depending on the market. This is also known as two-tier pricing and is common in many developing nations with a strong emphasis on the tourist industry. Under this arrangement, locals are offered lower prices while foreigners are required to pay more, in many cases without their knowledge, for the same item or service. Careful research, establishment of contacts, and negotiation skills can all help minimize the effects of such pricing schemes, at least to a certain extent.

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