The Danish firm a2i Systems A/S sells software that helps service stations implement dynamic pricing strategies for gasoline sales. Service stations that use the software typically offer lower prices in the morning than in the afternoon and even raise prices when competing stations with very low prices have long lines. In an article in the Wall Street Journal, the firm’s CEO noted, “This is not a matter of stealing more money from your customer. It’s about making margin on people who don’t care, and giving away margin to people who do care.”

a. What does the CEO mean by “margin”?

b. Briefly explain how these pricing strategies “make margin” on customers who don’t care and “give away margin” on customers who do care.